KNOW WHAT YOU ARE SIGNING BEFORE SELLING YOUR PROPERTY!
DIFFERENT TYPES OF SELLING AGENCY AGREEMENTS & AGENTS COMMISSIONS
What is an agency agreement?
An agency agreement is a legally binding contract between you and the real estate agent entered into before selling your property. An agency agreement sets out what the agent is authorised to do for you and stipulates all commissions and any other costs you may be liable to pay. An agency agreement usually lasts for a fixed time period. Methods of ending an agency agreement vary depending on the particular clauses in the agreement. Usually, agency agreements stipulate that you must provide written notice in order to end the agreement.
There are different types of agency agreements for the sale of residential property. Your rights and the amount of commission you may have to pay vary depending on the type of agency agreement you enter into.
It is therefore important that you are aware of the type of agreement you sign and that you read and understand the terms of the agreement before signing.
Types of agency agreements
An agent is usually entitled to be paid commission when a property is sold. An agent’s entitlement to commission may vary depending on the type of agency agreement you enter into.
- Exclusive agency agreement:
- An exclusive agency agreement gives exclusive rights to one agent to sell your property.
- An agent is entitled to commission if the property is sold during the term of the agreement.
- Under this agreement, an agent may be entitled to be paid commission whether or not the agent is the one who effectively causes the property to be sold. This means that even if the property is sold by another agent or by you, the agent may still be entitled to be paid.
- An agent is also entitled to commission under this agreement, if they have introduced a buyer who later buys the property.
- Signing more than one exclusive agency agreement for the same property may mean that you have to pay two sets of commission.
- Sole agency agreement:
- A sole agency agreement is similar to an exclusive agency agreement. This agreement also gives rights to one agent to sell your property and allows you to find a buyer yourself.
- Under this agreement, an agent may be entitled to be paid if the property is sold during the term of the agreement.
- The key difference of a sole agency agreement is that unless you are the one who is the effective cause of the property being sold, an agent may still be entitled to commission even if the property is sold by another agent or if the original agent introduces a buyer who later buys the property.
- Signing more than one sole agency agreement for the same property may mean that you have to pay two sets of commission.
- General Listing/ Open agency agreement:
- An open agency agreement lets you list your property with a number of agents who can market and sell your property on a non-exclusive basis.
- Under this agreement, the agent who finds the buyer is entitled to be paid commission.
- Multiple listing:
- A multiple listing occurs when you deal with an agent who is part of a network of agents who work together to sell your property.
- Under this agreement, the agent who you signed up with is entitled to be paid commission.
- Auction agency agreement:
- An auction agency agreement is effectively the same as an exclusive agency agreement.
- This agreement is used where the property is listed for auction.
- Ensure that you review and understand the terms of the agency agreement before signing. If you are unsure about the terms of an agency agreement, you can contact us for advice.
- Ensure that you have not signed more than one agency agreement when selling a property, to avoid paying two sets of commission.
- If you have signed more than one agency agreement in relation to a property, review the terms of the agreement and seek legal advice.
For further information visit www.jemfish.com.au.
To speak to a solicitor or arrange a meeting please contact our office on (02) 9267 6263.
Disclaimer: The information in this article is correct as at 28 April 2015. This information is not to be taken as legal advice and at all times we recommend you seek independent legal advice regarding your own individual circumstances from your legal representative.
For further information, please contact:
Elizabeth Pecipajkovski Solicitor Phone: (02) 9267 6263 Email: Elizabeth@jemfish.com.au
Greg Jemmeson Partner Phone: (02) 9267 6263 Email: Greg@jemfish.com.au