I am about to sign an agreement to sell an apartment. The standard REIV form says agent commission is payable once a binding contract is entered into. It happened to me once the buyer pulled out and I still had to pay the agent commision (thousands of $). To my more informed comrades, will you insert a clause say commission is payable only if settlement takes place, and how common this is. I undersatnd some would argue the agent already done the work, but to me it’s no big deal if he looks for another buyer, but paying close to ten thousand dollars for nothing is a big deal to me. Your thoughts please.
I’ve just started in the real estate industry as an agent and in our office we only get paid after settlement. I’m not sure what happened to you in the past but I believe you should only pay when you have accepted an offer and settled.
I’m writing this from Sydney so maybe in different states there are different rules. I’d suggest you ask your solicitor as that’s what he’s being paid for. Goodluck.
I did some courses at the REI in SA to get an agent’s license (need it for property management) one of the things they mentioned at one of the sales training courses is to always insist on a 10% deposit from the purchaser (although it is not written anywhere in the legislation).
The rationale behind it was that it is enough to cover the agents fees if the settlement does not go through.
Now we know where their priorities lie, does this actually shock anyone???
Investment Property Management
http://www.adprop.com.auOriginally posted by Dr.X:I did some courses at the REI in SA to get an agent’s license (need it for property management) one of the things they mentioned at one of the sales training courses is to always insist on a 10% deposit from the purchaser (although it is not written anywhere in the legislation).
The rationale behind it was that it is enough to cover the agents fees if the settlement does not go through.
Now we know where their priorities lie, does this actually shock anyone???
Investment Property Management
http://www.adprop.com.auNO!
By the way; I have had every agent I’ve ever tried to buy a property form tell me the minimum deposit was 10%.
When I tell them that my deposit will be $1000 and not a cent more they get rather miffed, but always accept it because a sale is a sale. Their priorities are their hip pocket.
Cheers,
MarcOkay, I find what you have both said pretty disturbing.
There is two reasons why we will ask for the 10% deposit.
1) By putting a 10% deposit on the table the buyer is commiting themselves to the deal and therefore there is a lot less chance that they will pull out.
2) The seller can see that the buyer has commited and therefore will realise that the buyer genuinely wants to buy the property.
If the buyer pulls out after submitting a deposit the agent will not be paid but the seller will retain 0.25% of the purchase price as a rescission fee. This will then actually go to pay the solicitor for time wasted doing all the paperwork.
I can quite honestly say that in our office in NSW this is what happens. If you are in SA then different rules may apply so seek legal advice as I have stated in my above post.
Mark
Hi all, living in Perth. Purchasing in Brisbane. Just received contracts in mail. As nothing was mentioned previously, i just assumed the deposit was $1000, as per previous purchases. On top of this they are asking for $8250 when i get Finance Approval. Do I just call RE agent and tell them I’m only paying the $1000 deposit now, and cross $8250 off contract and initial it? Any advice appreciated please. Regards Linda
Hi Linda
we are in QLD and most of our purchases have been in QLD
we have only ever paid $500 for a deposit and if pressed for more have offered a deposit bond
– there is another thread dealing with that in relation to a VIC property on this forum
The money only ever sits in a trust account and earns no interest – I would prefer that it was in my account earning interest.Thanks Raddles, will call agent and negotiate. Linda
Linda
Just amend the contract initial the change and post it back.
Once the Vendor signs the Contract and the Selling Agents has received the deposit, he dates and executes the document.If buying Qld make sure that you do not terminate under the “Cooling Off” clause and check that your finance & building inspection clauses are realistic.
Many Qld Vendors are now not extending these dates and placing the properties back on the market at a higher price.
Spoke to clients last night from Victoria who were not aware of the Qld process. We are a little different to others.
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In Victoria it is quite common for a 10% deposit to be paid. I am originally from WA and I know there that you can get away with only paying $500 or so. If you sell a property and the purchaser pulls out prior to settlement (after the contract becomes unconditional) then you can keep the 10% to cover all costs, incluidng legal and commission. Given the agent’s commission is only about 2.5% the remaining deposit should be sufficient to cover any other loss.
Julie
Property Conveyancer
MelbourneThanks for valued replies. Regards Linda
I am a seasoned property investor in Victoria and bought many properties through agents. I have NEVER paid more that $1000 as the deposit. If the agent does not like my offer, thats ok i will move onto the next house
Getting back to the original question. The agent is generally entitled to their commission once the contract goes unconditional however they only get paid when the property settles – two different events.
If the purchaser pulled out during the cooling off period the vendor is entitled to 0.25% of the purchase price (in NSW). The secondary event, settlement hasn’t occurred so payment cannot be made (yet).If the purchaser pulled out whilst unconditional, the agent IS entitled to their commission but is only entitled to one commission for the sale under the agency agreement (need to check this out).
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