The High Road: Seller scofflaws walk free

(Flickr photo by Jeremy Brooks)

Every contract that I have seen for an exclusive listing requires the seller to pay the commission if a ready, willing and able buyer makes an offer to purchase the property.  And there is case law supporting the obligation.

I’m prompted to write this post after chatting with another broker, “Sandy,” who talked about the prospect of being stiffed by property owners who, it seems, merely want to test the market by listing an apartment for sale or, more benignly, have a change of heart.

She mentioned the situation of a growing family in which three children had to share the only other bedroom besides the master.  (In fact, that was the very way the family from whom I ultimately bought my current co-op was living.)

After surveying the market and seeing how much more they would have to pay for a larger property, the sellers decide they can make do a little longer and cancel the listing — this after having received a full-price offer from a qualified buyer.

As for the commission on their $1 million unit — let’s say it was only 5 percent — the broker walks away with nothing, zero, zilch, bupkes despite binding contract language that would result in at least a $25,000 payment (if a buyer’s broker were involved) and as much as $50,000.

Mind you, the broker has spent valuable time and money on the listing.  He or she has analyzed comparative listings, met with the seller, developed a sales strategy, created marketing materials, invested in advertising and held a number of open houses at times the broker could be visiting other properties, relaxing with The Times, enjoying a movie, browsing stores or any other of activities in which “normal” people indulge themselves on a Sunday.

But sellers of a quixotic bent frequently just walk away without compensating brokers with so much as a dime. They have little to lose even though brokers have the option of suing for their commissions.

“When was the last time you heard of a broker suing for that?” Sandy asked me rhetorically. 

I think the reason that none comes to mind is that brokerage firms don’t have the stomach for a lawsuit: The cost and public relations impact of suing a client rarely sits well with them.

It ain’t right, yet there’s nothing to be done about seller scofflaws.  If there is, a solution escapes me.

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248
F: 347-438-3201
Web site

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