Commission Likely Not Owed
Question: We listed our home in north Scottsdale for $280,000, after our listing broker told us that $280,000 would be a reasonable sales price. Within three days we had seven offers on the home, including five offers for $280,000 and two offers for more than $280,000. We refused all of the offers because we always thought our home was worth at least $300,000. We now no longer trust our listing broker, and we want to cancel the listing agreement. Our listing broker says that, although we did not have to accept any of the offers, we owe a listing commission of 7 percent under the listing agreement because our listing broker produced seven buyers who were each a “ready, willing, and able buyer.” Do we have to pay our listing broker that commission even if we didn’t accept any of the offers?
Answer: Probably not. First, before entering into a listing agreement you should have asked your listing broker to do a comparative market analysis or a broker price opinion for you to review. A CMA or BPO shows comparable sales of homes in the area and would have helped you determine an accurate sales price for your home. Second, a listing agreement is a contract like any other contract. In other words, neither you nor the listing broker can cancel the listing agreement without cause. If you can show, however, that the listing broker deliberately misrepresented to you the value of your home in order to get a “quick” sale with a “quick” commission, then you probably have cause to cancel the listing agreement. Third, even if you cannot show a deliberate misrepresentation, and you cannot cancel the listing agreement for cause, your listing broker would only would be entitled to a listing commission now if there were no material contingencies in those seven offers. Examples of material contingencies are financing, clear title and a home inspection. Inasmuch as those seven offers undoubtedly contained one or more material contingencies, your listing broker probably did not present an offer from a “ready, willing and able buyer.” Therefore, you should not owe your listing broker a commission.