Guaranteed Ways to Lose or Delay Your Commission

With the large volume of property work that we assist clients and Real Estate Professionals with every year, we see many situations where Agents miss out on commission or face major delays in payments.

We have set out four traps which you and your team need to be wary of.

Trap One:  Failure to get your vendor’s written appointment of you as agent

The effect of not complying with this requirement is to make the agency contract entirely unenforceable.  You cannot deduct commission from the deposit, and you cannot recover commission as a debt due from the vendor (Section 62 Real Estate Agents Act).

Trap Two:  Failure to collect the deposit

If the contract provides for payment of a deposit, as is usual, then the Agent is under a duty to collect the depositk, or to advise the vendor if it has not been paid.  Failure to comply with this duty, while not automatically disentitling the agent to commission, invariably causes delays in getting paid, and worse, can lead to difficulties in obtaining your commission at all.

Trap Three:  Failure by the Agent to exercise due care and skill

An agent should:

• Advise as to the best method of sale, and the price likely to be obtained.
• Avoid misrepresentation, by ensuring that any information given to a purchaser is accurate.
• Ensure that the agreement is properly drawn up, that it accurately describes the property, and is correctly signed by all parties.

Trap Four:  When an Agent purchases from his or her vendor … failure to strictly comply with the Real Estate Agents Act requirements

These are:

• Vendor’s consent must be obtained.
• Before seeking the consent or, if the vendor agrees, within 14 days after obtaining the consent, an independent valuation is to be supplied.

These rules apply not only to the listing Agent personally, but also to any partner or other employee of the Real Estate Firm, and any spouse or child of any of these persons.

Any contract made in contravention of these rules is voidable at the vendor’s option, and whether or not the sale proceeds, no comission is payable.  If any commission has been paid, it must be refunded in full.