Commission Disputes: Listing and Buyer Broker Considerations

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6.15.11

By: Stephen J. Nash
Nash Law Firm
nash@nash-law.com

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When looking at a potential commission dispute, the Listing Brokers knee-jerk reaction is to not pay the Buyers Broker.  Afterall, the Listing Broker wants to support their agent.  Prior to taking that position, the Listing Broker should take a close look at the situation to make sure that the position is defensable.  To support your agent only to have to backtrack later on does not help the relationship.

Likewise a Buyers Broker tends to automatically assume that their agent is due a commission as long as there is a signed Buyers Broker Agreement.  A better way to support your agents is to make sure thatey do what is necessary to make for a stronger argument if a dispute arises.  

Listing Agent Considerations

Some things the listing agent should consider when decided whether to not pay out the commission to the buyers agent:

• The buyer most likely will support the buyers agent because they have developed a relationship and will provide testimony that the buyer would not have bought that property but for the effort of that agent;

• While you can point to all of the help that he/she provided to the buyer did you provide an Agency Disclosure Form to the buyer?  If not, it is difficult to argue that you were instrumental in persuading the buyer to buy the property yet there was not a significant contact that required you to provide the buyer the Agency Disclosure;

• Did you tell the buyers’ agent that you were not going to pay out a commission

Buyers’ Agent Considerations

Some things the buyers’ agent should consider the following to avoid a commission dispute or make their case stronger if there is a dispute:

• Accompany your buyer when he/she views a house if at all possible;

• If you can’t, make sure you give them your card or something else in writing to give to the agent at the home;

• In the beginning of your relationship, explain to the buyers in the importance of letting the listing agent know of your relationship if your buyers ever views a house on their own;

• If you know that your buyer viewed a home without you present, call the listing agent as soon as possible to let them know of your relationship, even if you told your buyer to tell him/her;

• Fully represent the buyer

NOTICE

The foregoing is not intended to constitute legal advice for any specific circumstance, but is intended to reflect broadly applicable principles, under Minnesota law, relevant to a typical situation. Each set of facts and each contract is, or can be unique; the unique facts and specific language of the contract may require a different legal analysis and may result in a different outcome. Before proceeding in reliance upon this or any other general description of law, consult with an attorney competent in the field of practice relevant to your situation.

Copyright 2011 Nash Law Firm