FAQ – “I showed this buyer my listing on three separate private showings. They told me they were not working with an agent but I just got a call from an agent telling me they have an offer from these buyers. What is my recourse as far as my commission goes?”
In this video Steve Jamieson, Managing Broker of RE/MAX Crest Realty Westside, provides some hints on how to avoid a commission dispute, and the options that must be provided to an unrepresented buyer before writing a Contract of Purchase and Sale.
Here’s a brief summary:
We know what you were thinking.. Ka-Ching! A double-ender!! Well, here’s the bad news. There is no such thing as implied agency in a dual agency situation. That gives you little or no grounds for a commission claim.
Long before you write a Contract of Purchase and Sale, you must establish how you are going to represent a buyer in terms of an agency relationship. The sooner you figure this out, the better.
It can be tricky territory when trying to figure out where you stand with a customer, so try to ask the right questions. In addition to the usual “Are you working with a REALTOR®?” perhaps add, “If you wanted to write an offer on this property, would I be the one to write it?” or “Who are you working with?”
Always have some Working with a REALTOR® brochures on hand so that the different agency scenarios can be explained and acknowledged right away. A signed brochure can be a major benefit to you in a commission claim.
If you have a Limited Dual Agency Agreement already signed by the seller, have it ready. As we know, dual agency requires express written permission of both parties (buyer and seller) before drafting the Contract of Purchase and Sale.
By having signed acknowledgments / agreements you will leave little room for any confusion about commission. We know that sometimes things can get a little murky but remember your duty to your client (the seller) is to sell their home. Do not let a potential commission dispute get in the way of the transaction. Get the sale done first and then worry about commission.
Let’s say the introduction to the property was a bit different. The buyers came to your open house and then you got the call from an agent saying they have an offer from those buyers. Yes, it could feel like the agent has parachuted into your sale, but public open houses are just that, and these buyers are not your clients and therefore you have no claim to the selling commission. It would be prudent for the selling agent to at least view the property they are writing an offer on. Jeez.
Writing a contract for an unrepresented buyer
Let’s say the buyer is not actually working with another agent, and they do really want you to write the contract. You have some important responsibilities in regards to agency, which means you still might not be entitled both sides of the commission.
You need to offer the buyer some options and have them make the decision that is best for them. Have them read and sign the Working with a REALTOR® brochure and depending on what they decide;
- Present them with a Limited Dual Agency Agreement already signed by the seller. Note: This would only be acceptable if the buyer is also in fact your “client”. Somebody who you don’t know can really only be represented as a “customer”. i.e. No Agency, or
- Propose “No Agency”. All the duty of care clauses must be written into the contract, such as independent legal advice, inspection, PDS, title search etc. or
- Recommend that they write the contract with another agent. Yes, sometimes this is the only thing you can do.
Note: At the time of writing, Limited Dual Agency is on the chopping block. The Real Estate Council’s Independent Advisory Group recommended this last June and the new Superintendent of Real Estate confirmed his plan to prohibit this practice at an industry conference last month.
Please note: The Frequently Asked Question video series is used for training purposes within our group of RE/MAX offices. If you are licensed at a different brokerage, you must refer to your own Managing Broker for advice.