Commission Dispute/Buyer’s Threat Not to Close
QUESTION: I listed a residential property for sale. During an open house, I showed the property to a potential buyer. Several days later, that individual called me, said that he was still interested in the house, and that he might use his friend (we’ll call her Susan Jones) as his agent. I tried to contact Ms. Jones but she never returned my calls. Instead, the buyer contacted me directly and asked to meet in my office to discuss the terms of an Offer to Purchase. A contract was eventually signed without the assistance of Ms. Jones. The transaction is now scheduled to close. I do not believe that Ms. Jones is entitled to a cooperating commission but the buyer has indicated that he may not close if we do not agree to pay her at closing. Can the buyer do that?
ANSWER: The contract between the seller and the buyer is separate and distinct from the contract between the listing agent and the buyer’s agent. If the buyer refuses to close for the reason specified above, that refusal would constitute a breach of his Offer to Purchase and Contract. That breach would entitle the seller to payment of the Earnest Money Deposit. Here, the right of the buyer’s agent to a commission depends on whether a separate contract was formed between the listing agent and the buyer’s agent. If you assume that the listing agent made an offer of compensation to cooperating brokers, that offer can only be accepted by a cooperating broker procuring a ready, willing and able buyer. Here, there is a substantial question as to whether the buyer’s agent did that. In this circumstance, the listing agent can insist that no portion of his or her commission is paid to the so-called buyer’s agent at closing.
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