Question regarding Broker contract

[nicoblu]

Hi I am new to this forum and am looking for some real estate advice. Thanks to everyone in advance for your help.

My husband and I are relocating. He has already moved and we are waiting for our house to sell so the kids and I can move also. Our house had been on the market for 3 months and our contract is up with our realtor on July 30th. We are considering using another agent or doing for sale by owner after the contract expires.

I was reading our Exclusive Listing Agreement and I found this clause:


Commission: If a purchaser is procured for the property by the Broker, by any other cooperating broker, by the seller, or by any other person at the price and upon the terms stated above, or at any other price or upon any other terms accepted by the seller during the term of this agreement or if exchanged or optioned during the term of this contract and said option is excersised, or if within (she filled in 90) days after the expiration of this agreement, the property is sold to any person to whom the property was shown the seller agrees to pay a commission of (she filled in 5%) of the sales price plus required sales taxes and any applicable transaction fees, unless the property is listed with another cooperating broker at the time of such sale.

Then below that is a paragraph that she crossed out. It says:

In the event that an option is accepted by the Seller, all money received for said option shall be divided _____to the Seller and _____to the Broker with the Broker not to receive more than the above agreed upon commission.

I feel like it's basically stating if we sell AT ALL within 90 days AFTER our contract expiration date then we have to pay 5% commision to our current agent even if she is not our agent. Is that right? Even with another agent?

So I need a clearer explination of this clause.

Thanks in advance,

El

[judyo]

In my area we have a similar clause. Here it means if a buyer was brought through your home during the listing period, you could not sell to that buyer on your own until 90 days after the expiration date of the listing agreement.

If you relist with another broker, you do not owe the original broker a commission even if that buyer purchases your home (most likely through the selling agent they originally saw your home with). In this case the new broker will receive their listing portion of the commission.

Sometimes this does happen when a selling agent brings a buyer through a listing close to the expiration date. The buyer didn't write the offer right away and came back after the listing expired & was up with a new broker. So if you relist with another brokerage you're in the clear with the original listing broker.

[nicoblu]

Thanks a lot!! I thought I was reading it wrong, but I was unsure. That really clarifies things for me.

[james.ash]

Basically You have agreed to pay your broker 5% of the sales price for selling your home. You may also find in your contract a provision that your broker may compensate a buyers broker, a portion of the commissiont for procuring a buyer. Typically a Seller's Broker splits the sales commision 50/50 with a Buyer's Broker.

When your listing contract expires, if you go FSBO and sell the property within 90 days the Broker MAY enforce this provision of the contract. If you refuse to pay the commission, the Broker would have the legal right to seek damages in a civil suit. The odds of a court awarding the broker damages are in the brokers favor.

How will the Broker know if you sell? Brokers who are stingy enough to pursue expired lsiting commissions will check the County Assesor's Parcel database routinely to check expired parcel numbers to see if there has been a change of ownership.

If you list with another Broker who offers compensation to Buyer's brokers (Cooperating Broker) you are free of this clause in your listing agreement.

Now here comes the part you don't want to here. Most Sellers who bail on their current broker do so because they think their current broker isn't doing enough to move the property. When you change brokers you aren't getting much of a difference (unless your current broker is totally incompetent and is not doing any advertising). Your property will be marketed on the same MLS, in the same newspaper, in the same Buyer's Guide.

The Market not the medium will detemine IF & WHEN your house sells. If your broker is providing you with comparable listing and sold reports you should be able to tell if properties are moving in your market and at what value range. If other properties are being sold and yours isn't, the usual reason is the property is overpriced (I know, no one likes to hear that but Real Estate is Science not Art). If other properties are not moving in your market you may be the victim of a bad market and it wouldn't matter if you traded in your current broker for a magician in that case.

[AlabamaRealtor]

what James said...

[judyo]

When your listing contract expires, if you go FSBO and sell the property within 90 days the Broker MAY enforce this provision of the contract. If you refuse to pay the commission, the Broker would have the legal right to seek damages in a civil suit. The odds of a court awarding the broker damages are in the brokers favor.

One item is missing that is part of our contracts (& is part of the paragraph mentioned by the original poster). You would have to sell the property to a buyer that came through the home during the listing period. If the seller went fsbo and found John Smith, who never viewed this home while it was listed, a commission would not be due.