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The seller does not have to accept the offer, HOWEVER I believe they should be made to pay the sales commission /the listing agreement because the Realtors have done what they were “hired” to do. If the seller does not have the cash, then I believe a lien should be placed on the property. For far too long the real estate industry, at least in my area, has coddled sellers and been afraid of getting a bad reputation so have just “let these situations go”. It is time that people understand that this is a business, not a hobby, and agents have families to feed and bills to pay just like everybody else. If one of the entities–either agent or their firms, don’t want to be paid, fine, but everybody involved should be given a chance to collect a full paycheck. I believe most listing agreements are clear and if not, verbage needs to be changed. Some little detail, such as the closing date on the original offer, should be negotiated and not allowed to be the “reason” the seller rejects the contract. A good listing agent will have covered all these points in the first place. ( Actually, I think we should collect a nonrefundable marketing fee (part of the commission) at the time the property is placed on the market.)
Business is business!!
Janet Stafford, Texas Broker
Licensed since 1977
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We Should partner together!! You are so Right!!! Tell your Seller his boss wants him to work for a couple of weeks free! Lets see how he likes that!!!
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While I agree that everyone is entitled to be paid for their work, most listing agreements say that the commission is not payable until closing or the seller’s breach.
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A lien would get you paid when or if it ever sells in the future.
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“Seller’s breach” could very well be not accepting a full price offer, agree?
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David, the TREC Listing agreement says the compensation is earned when the broker, individually or in cooperationwith another broker procures a buyer ready, willing and able to buy the property at the Listing Price or any other price acceptable to the Seller. That’s Paragraph 5B. So on presentation of a list price offer, it looks like it is EARNED then.
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I believe you answered your own question. In this case, the seller did breach the agreement by refusing to sell when a ready, willing and able buyer was provided at full asking price. I am at fault for letting folks go many times when much time has been spent and every situation is different, but if we do not take ourselves seriously, who will??
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Michael, You are correct. The commission earned, but it must also be payable in order for the Broker to collect it. In comes the question if the seller actually breached the listing contract by not accepting a full price offer.
This is going to be two sided every time you look at it. There simply is no getting around it. If the seller was not willing to accept a full price offer, the likelihood that they will pay you a commission is pretty remote.
Unfortunately the property code doesn’t allow the longevity that you might think on placing a lien on property. Especially when it is the seller’s homestead. There might be a way to place an effective lien on residential property if it is NOT the seller’s homestead, and the commission due was significant enough. There are other considerations to look at when placing a REAL ESTATE BROKER’S LIEN on property.
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I totally agree! Well said.
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I strongly agree with you Janet. Happy to know there are many Realtors not afraid of bad reputation and simply mean business. I have let go many clients coz they would ask for commission back as high as 2.5%.
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Hi Nikki, I like Janet’s comments too. It is a shame that people do not think we are worth our commission. I guess many people do not realize how much time and effort and $$ goes into listing and selling properties.
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How many of us have gone shopping for a car? We use the salesman’s time for a couple of hours, (while ready buyers come in), and then go somewhere else and buy. Sometimes we waste the time of the salesmen at several locations, before we make a decision. Should we pay them a commission for wasting their time? Just saying
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Agree 100%!!!
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Love this! I couldn’t agree more.
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I like “non-refundable marketing fee” Is it OK with TREC??
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BRAVO!!!!!!!
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AND TIME TO LET FOLKS KNOW THAT THIS IS INDEED A “PROFESSION “AND NOT A HOBBY!!!!
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I totally agree! What other business professional works for Free! We SHOULD be charging an upfront marketing fee; to be paid at signing the listing agreement and it is non refundable. Whether the property sells or not. I was told by an Attorney you can not sue for services in the state of Texas. You can sue for breach of contract. That is why Attorneys require a written agreement before they agree to represent a Client.
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The article didn’t say if the seller actually signed a contract. If he did and then changed his mind he is in breach of contract and I believe a commission is owed. If he was not under contract then he has the right to change his mind. I’m not the type to sue a client, that would spread faster than the speed of light and I wouldn’t want to tarnish my reputation like that. The seller would become the victim and I would become the “money grubbing” realtor. As far as collecting money up front, there are so many different business models out there now with some agents giving back half their commission to the principals it makes our market even more competitive. I try and build a bond with my clients and have them sign a listing agreement. 99% of the time all goes well but for that 1%, I would not want an angry client saying bad things about me to dozens of people for a few thousand dollars.
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I agree Sheri…
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Janet,
I agree with you on this matter, Totally! seller not accepting the full price offer, yes, the Realtor has done their job, so seller, it’s time to pay up, we have families to provide for too!! Great answer!
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You are absolutely correct on all points!! Our industry needs to stick together and have all REALTORS set these same standards, otherwise it doesn’t work. And yes, we do collect non-refundable marketing fees up front.
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Barbara Sanders, Texas Realtor
Licensed since 1976
A legitimate reason may have caused the seller not to accept the full price offer. We’re big girls and boys so IF NOTHING WAS SUSPECTED before & during the listing being signed. If the seller has lost the job that precipitated the sale, or illness is involved, I want no part in charging the seller. If it is THAT important, cover yourself on the listing form, i.e. advertising. I personally have done so, sensing a possible problem (like a disinterest is sprucing up the home &/or not being willing to bring simple things up to code. We win most and lose some! “Stuff” happens! What I say is, “Tune-In”.
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There is only a statutory commercial broker’s lien – I don’t think there is a valid way to place a lien on property based on a residential transaction commission (except through a judgment lien on non-exempt property). I agree that a seller’s refusal to sell for list price is a breach of the listing agreement, absent special provisions.
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I seem to remember back in the foggy years of long ago, a real estate broker cannot create a situation to prevent the sale of at least, a homestead, could be broader than that, at least not with a mechanics lien nor an intent to file lien notice given to a title company. I have known of title companies being notified and withholding closing without fees being paid. An attorney can possibly explain this. I think you have to go through the courts and win a summary judgement, where you will have the defense attorney try to make you look like a Charleton.
Also, remember there is much more to a valid offer than just the price. If there is anything different than described in your listing agreement, then what is reasonable will be taken into account. Does the listing state the seller will pay for a warranty for a year, will vacate immediately (stated above already) or in and unreasonable amount of time,
will pay for a survey, title policy, accept the type of loan the buyer wants, seller asked to pay some of buyer’s closing cost etc., won’t accept $50 of a 20 day option, or even accepting an option, etcetera, ad nausium.
Having been in real estate since 1972, I have had a few heart aches, probably fewer than most, but one I always will remember, and really wanted to get his money, for want of a better word. I can see us getting critical of putting in the work many do for a seller, and presenting the property for the seller. When a buyer opts out during or after an option period, we get unhappy, no money, preparing or looking at a termination and request for return of earnest money, or disbursements to be made. Buyers have a lot of outs. I have had buyers terminate and one in particular, I wanted to throw out of my office. Luckily, his wife talked it over with him over a beer and he called and asked if I had sent the termination yet, and said they would go ahead with the deal. That was my third transaction with him, and I have done another since that time. His wife is why I do business with him, and his mother helped out on the last deal.
I have an investor like everyone else does today, but when we do an offer, no survey is required, although requested, no warranty is required, they are cash deals, no loans, we do a 2% escrow, and a $200 option fee for 10 days, and these aren’t usually over $160,000 properties in the Lubbock market. We do ask for a title policy to be furnished by the seller, as that is customary in our market. We usually specify a closing date of 30 days forwards, and agree to close sooner if we submit an amendment after inspections, also, we have extended closings on occasions when the seller requested. My buyer is as congenial of an investor as you will ever find, and our offers are often what most listing agents dream of seeing. Still, there are things a seller could object to in our offer, besides price.
It would take a pretty strong situation for me to go after a seller of mine. If they thought enough of me to list with me, I will eventually get the listing again, maybe even sell some of their kids a house. As a selling agent, I have gone after a seller through his listing agent, but it was after the property was in contract and past the option period
If you are doing a real estate career, then be careful who you alienate. I have some families I have done over 20 transactions with, just the original buyers, their kids and grand kids, not to mention referrals to friends of theirs.
Real Estate brokers often seem pretty gutless to their agents, but often it is wisdom of experience that has given them longevity and success.
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Very well-said! I look at the relationships and how I’m helping people and the money just happens. I was a high school teacher for 22 years, so the perks of this job absolutely astonish me every day in comparison and I can’t believe I get to do this for a living and make a very nice living! It actually reminds me of teaching because I get to “teach” people about real estate and build friendships through helping others.
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Amen…I tried and failed to say all that using 5% of the words. Yes, it’s frustrating at times! I’ll flip that around for you. I have decided to terminate a few listing before due to an unreasonable seller. I can remember two recently who didn’t accept offers I presenter only to fire me and a few weeks later accept a lower offer from the new amazing listing agent (lol). If you have not had this happen yet it will in the future, prepare yourself now.
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Why should a seller have to pay a commission if the they do not accept a full price offer; the buyer stills need to be approved for a mortgage; the property stills needs to appraise to a value that meets the terms of the loan program. Very slippery slope claiming a “fee” grab because they “did what they were hired to do”.
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You are correct Vaughn. Who knows what the other terms and conditions were present in the offer. Maybe a 6 month closing? I can’t believe so many of you think the Seller’s refusal is not in their absolute right to decline an offer!
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Price is not the only condition of a sale. Terms also may not be acceptable to the Seller.
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Unless it’s a full price offer with no contingencies such as financing, option etc… the seller has the right to not accept BUT, I always thought if it was full price with no contingencies they had to sell. This article is not clear on that. I guess a seller could just change their mind about selling period and terminate the listing early in which case I feel the listing agent should be reimbursed all expenses. I write in an early cancellation fee in my listing agreements.
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I also write in an early termination fee…
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I agree. The seller may not agree to financing conditions, closing cost issues. Lease options, the closing date, etc….
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Sometimes agent/sellers list below market value in hopes of getting multiple offers, above list price. Also, some agents do not truly know how to do a proper CMA to determine a good listing price. If the seller doesn’t sign the offer, there is no contract…but they may not get another full price offer again!
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I guess the question would be – what constitutes: 5B (3) seller breaches this listing.
At what point could the agent walk away?
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There are multiple reasons why a full price is not the best for the seller. A Good Listing agent should look for their sellers best interest and not chase the commission and threaten their clients to accept an offer that may be lacking. I could never put a lien on a client for something like this.
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I’d be interested to know in which paragraph it states that if on the top line sales price it is equal to the list price a seller must accept the offer. There are so many other costs that may lie on other lines. Title policy cost? Survey cost? Residential Service Contract cost? Contributions to closing costs? Just to name a few.
A net sheet at the listing appointment should clearly spell out expected costs that may come along with an offer. Even at that, it’s still the owners call on acceptance or not.
It sucks…but come on…would you alienate a client at that point?
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So maybe it is an FHA or VA deal, and the Seller doesn’t want to accept it because many times their conditions or appraisals are difficult. As mentioned above, a Seller may hold out for a “clean” contract with short closing and no conditions that will cost them more in the long run. I advised a client to accept a less than full-price offer rather than an FHA contract with minimum down that was above list price because of the likelihood the property would not appraise at the higher number and the buyer would not have additional money to bring to the table.
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Darlene, it would depend on the terms that were part of the listing agreement. That details what financing the seller would accept. If he accepted VA/FHA in the listing and a client comes with a full price offer or more, the agent has earned the commission. Take the offer and do a backup for any subsequent cash offer. Either that or in the LISTING agreement restrict it to cash offer. Nervous about the financing offer? Require a larger option fee!
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There is no statute that authorizes a broker to place a lien on a seller’s property. A broker would have to sue to try to collect any commission he/she thinks is earned and payable. If a lien was filed without a court order, the Commission could consider this a violation of the broker’s fiduciary duty for putting the broker’s interest ahead of the client’s. Just a suggestion, but by the time you go through the lawsuit, spending time in your attorney’s office, being deposed , going to court, etc., you could probably list and sell way more property with buyers and sellers who are more respectful of your time. The only people guaranteed to come away with any money from the lawsuit are the attorneys.
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It is always about the RE agent. Maybe, just maybe, the seller/client realized that the agent’s CMA was poor, and that the agent’s advice to list the house/property at ‘X’ was a substantial undervaluing of the property.
What is the penalty for the agent’s negligence and incompetence?
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Mr. Eberwine, that’s an interesting slant, especially on this forum. What was the seller/client doing to substantiate the agent’s “undervaluing” before the offer was submitted? Maybe, just maybe, the seller/client should have addressed that issue at the time of pricing, not at the time of the offer.
Typically, an agent’s penalty for negligence and incompetence is starvation. But I understand your point.
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What about the “full price offer” with seller concessions such as excessive seller paid closing costs. Does that count as a full price offer?
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These forums always serve to remind me that although we’re all presumed professional agents, so many of us operate daily under such different circumstances. Not necessarily better or worse, just different. These circumstances shape our perspectives so differently. But here’s one thing we need to all keep in mind; unfortunately, not all agents and clients are honest or honorable.
Regarding clients and this thread, my suggestion to agents is to be more attentive to seller comments before agreeing to the listing. Hear what they’re saying. Consider what they’re not saying. Read between the lines. Ask more questions. My point is this; for many sellers who “bail on you” during the listing, there were often many red flags and alarms going off during the listing negotiation or presentation, that agents often ignore in their haste to get another listing. The best example I can give you of a pointed question, is one I often ask potential sellers right off the bat: “What happens if I DON’T sell this property for you during our initial listing period?” You’d be surprised at what an agent can learn about a seller’s intent from asking that question. Of course, the point is, not all listings are worth taking.
Regarding agents and this thread, the idea of collecting fees up front sure sounds good. But who doesn’t see dishonorable agents taking fees and then putting zero effort into marketing? Maybe even disappearing. They’d ruin that approach for everyone, and I suspect that’s why up front fees might never work.
Whether you deal with the same small group of clients regularly, seldom see the same face twice, are small town, big city, seller’s agent or buyer’s agent, newbie, or seasoned veteran…. Good luck and have a great day!!!
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Although I believe that we should be compensated for our work, I think we should consider what we could lose by suing a seller. Isn’t Real Estate about forming relationships? Don’t we rely on referrals? Is this seller someone who has bought and sold properties through you before? We want both buyers and sellers to sing our praises, not our greed.
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I’m tired of working for free. Is there any other industry where you can work for a day, a week, a month and get nothing? It’s time to stand up for ourselves and our profession.
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YES…many.
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Don’t get me wrong, but after 38 years in Real Estate, I have been lucky that I haven’t had a seller back out. It’s the buyers that have screwed me out of commissions. We haven’t always had a buyer’s representation agreement, therefore I have been a glorified taxi driver more than once. I just know in the small town I live in, word would spread like a wildfire, and not in a good way.
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great thoughts, all. I enjoyed the “enlightenment” all your comments provided. Thanks to each of you!
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Is this communicated clearly to a seller at time of signing ? The agreement is very long so it’s important to make this clear how commission Is earned to the seller? Medical doctors would say my first consultation is free and then there is fee afterwards. Do you get my point ?
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