Instances crop up regularly where sellers have been yellow-carded, being forced to pay double commission when allowing more than one agency to market their home.
A number of high court cases show that if an agent was even partially the ‘effective cause’ of the sale, the courts will rule in favour of that agent being paid a commission.
The difficulty often stems from establishing who was the initial or effective cause of the sale, which may not be easy to decide. If you are focusing on who’s playing who in the Rugby World Cup, it’s all too easy to forget which agent brought a particular prospective buyer to view your home.
The game
In a typical example, Agent A takes a potential buyer to a property that he likes, but the agent is unable to conclude a deal because the buyer finds the price too high. The mandate then passes to Agent B who persuades the sellers to lower their price.
Despite giving Agent B a sole mandate, the sellers also inform two other agents of the reduced price. One of these, having met the original potential buyer at a show house and knowing his opinion of the property for sale, contacts him to tell him about the reduced price.
This eventually results in a sale being concluded, with the two later-appointed agencies sharing the commission.
Agent A - the first to introduce the buyer to the property - takes the sellers to court, claiming that his agency was an effective cause of the sale. The court rules that the buyer may never have heard of the property if not for the involvement of Agent A.
The sellers are instructed to pay out a full second commission to Agent A.
Avoid the red card
A sole mandate is your best option to avoid the review panel upgrading your yellow card to a red. Even with a sole mandate, it’s important that your agent provides regular written progress reports, with details of all the prospective buyers she has brought to view your home.
Then, if you do move to another agency, you will be able to quickly see whether or not their prospective buyers have already viewed your home. And avoid the sin bin altogether by setting out in writing exactly how any commission splits will be treated.
