Appointing a Real Estate agent.

soldWhen it comes time to sell your property more often than not you will seek the assistance of a qualified real estate agent to get your property in the public’s eye and ultimately out of your hands.

Once you have chosen an agent and are feeling the butterflies of a new relationship he/she may give you an important form which could have unforeseen impacts on your sale.

This form must be produced to you under section 133 of the Property Agents and Motor Dealers Act 2000 (Qld) and is called a PAMDA Form 22a Appointment of Real Estate Agent – Sales and Purchasers. The crucial part of this form is Part 5 which asks whether you would like to appoint the agent to sell your home on the basis of an open listing or a sole agency/exclusive agency. Depending on which option you chose you may be liable to pay the agent’s commission in a variety of circumstances even if he does not present you with prospective buyers. Alternatively you may be liable for the agent’s commission even if the buyer defaults under the contract and doesn’t actually settle.

Section 135 of the Property Agents and Motor Dealers Act 2000 (Qld) outlines that the real estate agent must bring to the seller’s attention information on the form of appointment. However, at the time that this information in presented your situation may be subject to change depending on the buyers which come out of the woodwork from various contacts.

This topic was explored in Brenhaven Pty Ltd v Harbrae Pty Ltd [2008] QDC 259 and again in the case of Knobel & Davis Property Services Pty v Jones [2007] QDC 241 wherein the issue of agent’s entitlement to commission was argued and ultimately awarded in the agent’s favour. The issue discussed was whether the agent had in fact introduced the buyer and essentially been the ‘cause’ of the sale.

It comes down to the type of appointment which is selected in the Form 22a Appointment of Real Estate Agent. The options are as follows:

  1. Open Listing – you appoint the agent to sell the property but you retain the right to have anyone sell the property without being liable for his or her commission; or
  2. Sole agency;
  3. Exclusive agency – you appoint this agent only.

The third type of appointment can be dangerous as no matter who sells the property you will be liable to the agent  to pay their commission even if the Buyer is found through other means. This hardly seems fair. (e.g. if you have a friend or relation who ends up buying the property due to finding out about the sale from you, you will still be liable to the agent for their commission even though they didn’t find the buyer.)

To avoid making any mistake please contact our office for a review of the Agency Agreement before you sign.