AGENT DEMANDS COMMISSION FOR NO SALE

It all depends what is meant by "sell".

Things are getting tough for real estate agents. With prices falling, sales are falling and this means commissions are falling.

But some agents are undeterred, especially if they are members of the Real Estate Institute of Victoria (REIV). According to the REIV, it "actively works to promote a professional, ethical and responsible approach to real estate business".

Let's have a look at what is meant by professional, ethical and responsible.

When sellers place their homes for sale, they must sign an agreement with the agent. In the REIV's agreement, there is a lot of small print. Well, actually, aside from the REIV logo, it's all small print.

Buried on the back page of the agreement is a tiny clause which, like most of the clauses, is designed to protect the REIV agents, not the homesellers. This clause says that an agent is entitled to be paid a commission if the agent "sells" the property.

Sounds fair enough.

But it depends what they mean by "sell".

The Macquarie Dictionary defines "sell" as "dispose of to a purchaser for a price". In other words, a seller sells a home in return for a sum of money from a buyer. It's common sense.

But not according to the REIV. By their definition, "sell" means only that a buyer wants to buy and makes a "binding offer". If the seller says no, that's irrelevant. The agent can still claim the commission.

Yippee, here's a way for agents to earn commissions without making sales. All they have to do is invent their own definition of the word "sell". And, as long as it's all in a written agreement and the homesellers sign it, it's all legal. Agents can get a commission if they don't sell the home.

Last week, home owners Grant and Leanne received a Statement of Claim filed in the Dandenong Magistrates' Court. The claim is for $9,900 from an agent they haven't seen since the failed auction of their home in October 2003.

But now, in 2004, with sales slowing down, the agent is saying he "sold" their home last year.

The agent's claim says, "The plaintiff (i.e. the agent) in accordance with the meaning of the word "sell" as defined in agreed condition 1.16 of the Exclusive Auction Authority sold the defendant's home on the 3rd of October, 2003."

The claim says that because of this "sale", Grant and Leanne are "indebted" to the agent for the commission of $9,900.

The agent is using the REIV's own definition of "sell" to find a legal way to get paid.

Grant and Leanne are described as being "desperate". They have 21 days to lodge their defence.

It will be fascinating to see the spin from the REIV about this latest rort. Perhaps it will be that common defence, "The agent is acting in accordance with the law."

Yea, sure, the legal law. Not the moral law.


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FOOTNOTE: There is one lesson for all homesellers in this story. Don't sign anything unless the agent first signs a Homesellers Protection Guarantee.

This guarantee is available free to all homesellers. It can be accessed by clicking here.

The REIV do NOT approve of this guarantee. The CEO of the REIV, Mr Enzo Raimondo said that it "may generate a feeling of mistrust between the agent and the homeseller". Of course.

Based on that reasoning, no guarantees should be offered to consumers on any products or services.