My Listing Agreement Has Expired Do I Still Owe Commission?

By
Real Estate Agent with Associate Broker Keller Williams Realty

Last night got a phone call from a friend, out of  the Central Virginia market area, who had their home listed with another agent.  They told me that when the house was first listed the agent showed the property a lot, but in the past three months, there has not been any activity.  In the beginning, the agent held open houses, but the last few months has not been in contact.

The listing agreement expired and soon after that, someone contacted the seller and made a verbal offer.  Seller would like to accept but does not want to have to pay a $17,000 commission.  He said, "But the agent didn't do anything."

Well, yes the agent did do his job. As a listing agent, the job requires making sure all the documents are filled out properly and market this property.  Marketing on the Internet, open houses, put a sign out in the yard etc... It is the job of the listing agent to do what it takes to obtain a willing and able buyer. 

Many times a listing agreement allows for a period after the expiration which if a seller were to get an offer on the property by someone who showed interest during the time it was marketed the broker is entitled to the commission.

Why you ask?  Well, because once a property is listed many times the marketing efforts can continue to produce results for months afterwards.  Many times I will get calls on property that I have listed that have already sold six months afterwards, even longer sometimes.  The sales call is a direct result of the marketing efforts.    

Okay, so what his next question was what if the property closes after the expiration period and any extension period.  Well here, we run into the question of procuring cause, which is the purpose of the extension period clause.

Procuring cause means, what or who was the cause of this sale?  The buyer in this case contacted the seller within the listing agreement extension period because of the marketing of the agent.  Thus, the agent’s marketing is the procuring cause.  Consequently, it is likely that the broker is entitled to commission.  

Let me add, that I am not an attorney and by no means is this meant to be legal advice.  This is just basic information.  It is important to read and understand your particular listing agreement as each agreement could be different.

This has actually happened to me once.  I listed and marketed a commercial property (for a relative).  Once the listing expired, another agent took a buyer directly to the seller and negotiated a deal.  All this happened within the extension period of the listing agreement.  

My broker did not sue the seller in this case because it was a relative of mine.  I have known of other cases similar that the broker has sued for commission.  Not to say if my broker had, he would have won.  Nevertheless, I do know it could have gotten nasty.  

I also would never represent this particular individual again in a real estate transaction or give any more free advice.  As far as the agent that took the offer directly to the seller, well, cannot help but remember this type of behavior and it does change what I think of her.  Not sure, I could trust her again in any other situation.  

Bottom line here it is just best to keep all the cards on the table.  Every time I have tried to get away with something I knew was not the right thing to do it has always come back to bite me in the you know what.  My reputation with my fellow agents, prospects and clients means way too much to me to ever do anything that would knowingly jeopardize this.

 

Posted by

Nannette Turner Saunders, Associate Broker

Short Sales Coordinator

Keller Williams Realty

1709 Laskin Road

Virginia Beach Va

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Rainer
118,446
Nannette Turner Saunders
Associate Broker Keller Williams Realty - Virginia Beach, VA
Hampton Roads, Virginia Beach

Kathy thanks it really could go either way...

Bill thanks many folks don't understand the extension clause.

Diane one is not very likely to make any money focusing on the negative.

September 13, 2008 05:46 PM #26
Rainmaker
123,985
Kay Bennett
First Realty Company - Cookeville, TN
Your Best Cookeville Area Agent!

I've seen this happen before too.  I have had a seller tell me that the buyer called him and said when the listing expires, will you sell it to me for less?  thankfully in my case, the seller was a good person and knows how hard realtors work

September 13, 2008 07:00 PM #27
Ambassador
895,064
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Realtor - Ann Arbor Real Estate

I recently had this happen with a lease I had listed. It expired in July. Last week I got two calls on it. I called the former clients trying to lease and asked if they had leased it yet. They said no, so I gave them both parties names to call.

They very graciously offered to pay me the rental commission if it worked out.

When I had the house for lease they would NOT take any section 8 folks so it was phone call after phone calling and telling agents, no my clients would not accept Section 8.

So on the phone the other day, they told me they thought they had made a mistake in closing the door on the Section 8 potential lessors. I agreed as it would have been leased in the first month if they had been open to that.

The marketing is still out there on Trulia where both callers found it.

If I get paid, good but I would never follow up to see, just not worth it.

September 13, 2008 07:08 PM #28
Ambassador
883,319
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

I think that there are a lot of people that haven't figured out that the wheel of Karma has a boot attached to it... it can deliver a mighty big butt kick.

September 13, 2008 07:57 PM #29
Rainmaker
694,753
Lanre Folayan
Keller Williams Capital Properties-Buy a home in Washington DC. Sell a home in Washington DC - Washington, DC
Buy a home in Washington DC. Sell your DC Home Now

Lane you said it-A lot of people havent figured out that the wheel of Karma has a boot attached to it. Karma is a (Well! You know the rest-LOL). Great post.

September 13, 2008 10:55 PM #30
Rainer
16,847
Chris Canzano
Villa Realty Group, Inc. - Cape Coral, FL
Billion Dollar Broker - Cape Coral, FL

It never stops amazing me how sellers try to get out of taking care of their responsibilities.  I say they are obligated.

September 14, 2008 09:51 AM #31
Rainer
38,895
David Daniels
Owner of FlyersToYou, Inc. and former Top Realtor - Hemet, CA

This may or may not address the facts in this particular situation, but it's definitely a hot topic of late.

If old website postings are generating leads "after the fact"...the Listing Agent is going to have a tough time suing for commission. NAR has very strict policies on maintaining accurate (and current) information on the internet. It essentially becomes false advertising if it appears an agent is representing a property when they are no longer under contract. Some will argue that as long as the information was accurate when posted....it's okay to leave it there.

Simply not true.

I've read comments here on the rain (ad nauseum) where agents pose the question, "What am I supposed to do? Go back and amend or delete all of the information about that listing that I posted on the net? That's ridiculous! I have it on over 30 sites!"

Well, like it or not...the answer to that is, in a word....yes.

If I were a seller in that kind of situation...I'd point to the fact that the agent had NOT maintained the accuracy of her marketing according to the guidelines as established by the National Association of Realtors and set forth in their Standards of Practice. There's not a Board of Arbitration or court anywhere who would find in her favor. Outdated information or false advertising can never be considered "procuring cause".

Two and half cents.

Dave

September 14, 2008 10:14 AM #32
Rainer
63,682
David W. Bolick
Network Real Estate, Inc. - Little Rock, AR

Well, Mr. Barry Cunningham | Real Estate Radio USA, just what do YOU DO FOR A LIVING and just what do YOU think a listing agent should do....you have me real damn curious.  I thought buttin my ass for 15 minutes was pretty damn impressive!  Do you actually "work" for a living or are you just on "Disability"?

September 14, 2008 06:27 PM #33
Rainer
208,480
Bob Cumiskey
A1 Connection Realty, Inc. - Sun City Center, FL
US Army Retired, Your Sun City Center, Florida ~ Realtor

Nannette, It all comes down to your bottom line.  Do the right thing.  Going after the commission after the expiration is like shooting yourself in the foot.  You lose the buyer, seller, and anyone they talk to as future clients.

September 15, 2008 08:30 AM #34
Anonymous
Anonymous
Barry Cunningham | Real Estate Radio USA

Hi David,


Thanks for asking..in the limited space let me just say this, we run a number of high traffic blogs, have a nationally rated radio show with multiple sponsors and advertisers, and we buy and sell real estate. hardly on disability...whatever that means.

I am not going to define what a listing agent should be doing. Your "definition" was sufficient for the consumer's eye.

September 15, 2008 11:47 AM #35
Rainer
205,223
Sylvie Conde
Sutton Group-Associates Realty Inc., Brokerage - Toronto, ON
Broker, Toronto Real Estate

Where I practice, once the listing expires, the sellers do NOT have to pay commission, unless that buyer was introduced to the property while the listing agreement was still active.  I think what you are calling the listing extension (assuming it is an expired listing), is what we call the holdover period.  The holdover period is only good - again - if I took that buyer through the property, or another agent took the buyer through the property, while the listing agreement was still active (before expiry).

Unfortunately, if that is not the case, then the seller does not have to pay commission, even if the buyer only found out about the house, through some advertising that is still 'hanging around'.

September 15, 2008 01:42 PM #36
Ambassador
716,652
Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495

Nannette,

Congratulations on the feature.  I'm in agreement with Missy Caulk.  Life goes on, and it's just not worth it.

Mike in Tucson

October 02, 2008 05:18 AM #37
Rainmaker
781,274
Richard Weeks
Waller Group - Dallas, TX
Realtor, Associate Broker - Manager Business Development

It is sad but sometime we work as volunteers

October 02, 2008 05:24 AM #38
Anonymous
Anonymous
Susan Anthony

I have a question. I live in NJ. My listing agreement ended 12:01am Feb 5th the listing on Realtor.com was removed as of then. I recieved a call to see the house on the the 4th at 8:46pm on Feb 4th. Technically my house wasn't seen till after my contract expired. This was my first contact with possible buyer. If they buy the house do I technically still owe the expired selling agent a commission even though it wasn't seen until after my contract expired?Su

February 05, 2009 08:11 PM #39
Rainer
118,446
Nannette Turner Saunders
Associate Broker Keller Williams Realty - Virginia Beach, VA
Hampton Roads, Virginia Beach

Susan good question.  First of all I am not an expert of the laws in NJ as I am from Virginia.  In addition it does depend on the exact verbiage in the listing agreement that you have with the listing brokerage.  However, most listing agreements allow for a period after the agreement expires that the commission is still owed.  The reason for this is because the marketing done during the listing period could still attract buyers for several months after wards.  I am not an attorney and I always suggest that if there are questions with a contract that clients seek legal counsel.  I hope that was helpful.

February 06, 2009 06:11 AM #40
Rainmaker
906,969
Tony Marriott
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Associate Broker, REALTOR

False Advertising of any kind is a hot topic for me right now.  It's incredible and appalling how some agents that are clueless when it comes to Short Sales boast of hundreds of transactions and high closing ratios - neither metric being supported by the MLS.

August 29, 2010 08:37 AM #41
Anonymous
Anonymous
Karen Ward

Having been on the market for over a year and having trust in our agent to help us sell our home, there does come a time when wanting to try to sell it as a FSBO may be the only option to reduce the price of the house and not give away all your earnings in commissions.  There are sellers that have done everything their agent has asked and also followed suit with many of the comments received from showing agents.  It's funny how none of the agent comments above mention clients that hold to a listing agreement or in our case give an agent over a year to get a house sold- that sometimes cutting a commission maybe the only way in a down market to come out with some success.  The expectations of many potential buyers are unrealistic and that is thanks to the media in this particular market.  We don't blame our agent and we know we are priced well-however when the listing ends, the listing ends a buyer should not have compensate an agent for sale they did not achieve in the time frame given.  Bottom line the agent didn't get the house sold.

June 25, 2011 05:26 PM #42
Anonymous
Anonymous
Norm Curtis

I've had my home listed with an agent for five months. All they did was take photos, write up a description,give  it an MLS number  and post it on a website. There have been 37 hits on the website and no visits to the property. I have spent my own time and money to run newspaper ads and post it on other websites without any connection to the listing agency.

I've gotten more calls then the agent. If I sell the home due to my own ads am I still liable for paying the agent's commission?  I have 5 weeks to go before the listing agreement expires. I will be going FSBO after that.

 

August 31, 2011 09:45 PM #43
Rainer
38,895
David Daniels
Owner of FlyersToYou, Inc. and former Top Realtor - Hemet, CA

Norm,

I couldn't help that no agents have responded to your question, so I hope you don't mind that an EX-agent does. 

Unfortunately, almost all listing contracts are "Exclusive Right To Sell" agreements, where the agent earns a commission no matter what or who is the procuring cause. In other words, yes..even if it's YOUR marketing efforts that result in an offer to purchase, you will owe a commission.

BUT...please bear in mind that MARKETING a home is only PART of the Realtor's responsibility. The other part is negotiating the offer (or counter-offer) and handling the MANY, MANY details involved in the transaction. You sort of have to ask yourself a couple questions. Things like "What disclosures are legally necessary for me, as a seller, to provide". "Am I obligated to stay in escrow if my buyer is turned down by their first lender?" "What if there's a title problem? How do I get that resolved?"

An experienced and knowledgeable agent can help you deal with all sorts of situations that arise AFTER the marketing of a home. Finding a buyer is just one step in the whole process.

Good luck with the selling of your home!!!

Dave 

September 02, 2011 11:29 AM #44
Anonymous
Anonymous
Justin

With all due respect to Dave Daniels, I think most of the non-marketing things such as negotiation and escrow can often be better and more economically handled by using a real estate attorney, rather than an agent. The agents value is marketing, marketing, marketing. It is the MLS and the web, though as pointed out earlier, that can also be done by an owner without too much effort, but there is something to be said for the network of realtors and how they market homes directly. If a FSBO is on the market and the buyer finds it themselves on the web, that's great, but most realtors once they start working with a prospective buyer will mail info about available properties but not one of those will be a FSBO. The broke and co-broke commissions ensure realtors will all try to sell your house. They will not steer anyone towards a FSBO, and may actively steer buyers away if they can. You can try to do this yourself, but realtors will be less likely to cooperate on a FSBO house, because their return on their investment may be unclear. Who could blame them. 

 

I am not an agent or an attorney.

December 08, 2011 06:21 PM #45
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Nannette Turner Saunders

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