Simon’s Town Real Estate News

Double Commission Risk

Double commission and court cases! What sellers can do to prevent it?

Alice decides to sell her home. She is not aware of the fact that there are always a limited number of buyers in the market at any given time. She is not aware that she needs to create competition between the property buyers. No. She decides, wrongly, to create competition between the estate agents. This is where her problem starts.

Most estate agents have great intentions but when a sale is imminent greed becomes a factor. This is where Alice, becomes responsible for the decisions taken by her open mandate estate agents.

Because Alice can be exposed to double commissions and end up in court. Not only will she pay double commission she will also pay the legal costs.

Although the risk for double commission is small it happens from time to time and creates hassles - hassles you can avoid at no extra cost to you. The proposed solutions may even get you more money for your property. Let’s discuss what a double commission is and how you can prevent double commissions.

Because Alice decided to wrongly create competition between estate agents by awarding an open mandate (free for all), some estate agents will pull all the tricks in the book to sell Alice’s home; she can expect ridiculous offers, price confusion, to paying double commission. Let’s focus on double commission:

Alice is liable for double commissions when an agent who concludes the sale is not always regarded as the effective cause of the transaction. This happens because agent one took a buyer to Alice’s home and later agent two took the same buyer who then decides to make an offer through the agent two. Trouble!

Alice accepts the offer and the sale get processed. Alice gets her money and agent two the agent commission. Agent one feels that it is her sale and the commission is due to her and goes to court. And as a rule of thumb the judge decides that Alice is liable to pay a second commission to the first agent. Please note: There are exceptions to this where the court judge the second agent to be the effective cause but don’t bet on it.

How do you and Alice reduce the risk of double commissions?

I will say it over and over again: You must create competition between buyers (not agents). The buyers must feel they are dealing with a scares resource (your home) and needs to make an offer now - today. Keep the deal clean by pricing it to-sell, with one For Sale board in front of your property and appoint a top agent with a sole mandate. Remember to include the agent’s performance clause similar to our suggested guarantee of satisfaction.

Some estate agents will assure you that they can give you indemnity against double commissions. This is a lot of bull. The courts have shown that this indemnity is worthless.

If you have for some or other reason decided to sell your home with an open mandate and you have an offer from a potential-second-agent call SimonsTownRealty.Info for free advice. We may be able to help you before you sign the contract.

If you are faced with a double commission claim you can also phone us but we cannot promise you anything.

SimonsTownRealty.Info does however promise you a clean and fair deal if you decide to use our expertise when you want to sell your property.

Wishing you well

Johan Horak
www.SimonsTownRealty.Info Your property wise advisor
P.S. “I would rather turn you down today than let you down later”
Cell: (027)082 870 2004
Cell: (027) 082 955 6464
Fax: (027) 086 512 0274

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