Double the commission, double the trouble

All too often we hear that Agent A has shown a prospective buyer a unit who loves the property but doesn’t take it for some reason. At a later stage, the same buyer views the same property but now through another agent, Agent B.

This time round, the buyer puts in an offer to purchase with Agent B and the sale goes through without a hitch. So, who was the effective cause of the sale and importantly, who can claim the commission?

2 steps to being the effective cause of a sale

For Agent A to successfully claim that they were the effective cause of the sale - even if they didn’t complete the final sale documents - they would need to show that both of these requirements had been met:
1) They introduced the eventual purchaser to the property
2) Their efforts caused the sale to occur

Does Agent A have a claim?

What is particularly important is that Agent A’s claim is not against Agent B, but rather against the seller of the property.

Agent B is entitled to claim their commission from the seller but the onus is on the seller to insulate themselves from conflict between competing agents who may be showing the property to the same prospective buyer.

Can the seller be forced to pay double commission?

Instances such as this may necessitate the seller paying a double commission in the form of one commission to Agent B for facilitating the sale and a further commission to Agent A for being the effective cause of the sale if they were able to satisfy the requirements.

The seller can avoid paying a double commission by making sure that a good mandate is firmly in place, preferably one that is exclusive!

What if the buyer specifically wants to exclude Agent A?

We recently dealt with a case where Agent A wished to claim effective cause of the sale of a property - what set this matter apart from others is that the prospective buyer had realised that they knew Agent A and had a previous negative history with that Agent. The prospective buyer viewed the property with Agent B and then bought the property through that Agent.

Agent A attempted to claim effective cause but the argument fell flat as the purchaser stated outright that they would not buy the property if Agent A was involved, so Agent A had not met the requirement of their efforts being the cause of the sale.

Always obtain an exclusive mandate!

The simplest and easiest way to avoid unwanted commission disputes is to obtain an exclusive (sole) mandate to sell the property. An exclusive mandate will protect both the agent and the seller from unwanted disputes from other agencies.

If you need to download the TPN Sole and Exclusive Mandate, visit the TPN Shop

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