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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Topic:
Home Selling
Groups:
Diary of a Realtor
ETHICS and the REALTOR
Learn to be a Top Producing Listing Agent
Lessons Learned
Selling Soulfully
Tags:
procuring casuse
listing agent
commission
listing agreement
lynchburg homes for sale
campbell county homes for sale
bedford county homes for sale

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Rainmaker
895,373
Tony Marriott
Associate Broker, REALTOR
Haven Express @ Keller Williams Arizona Realty

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
Anonymous #42
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
Anonymous #43
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
Rainer
38,838
David Daniels
Owner of FlyersToYou, Inc. and former Top Realtor

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
Anonymous #45
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
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Rainer
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Nannette Turner Saunders

Hampton Roads, Virginia Beach
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