Question: In a recent column you discussed whether a listing broker was entitled to a real estate commission when, the day before close of escrow, the seller agreed with the buyer to cancel the sale of the home. You then said that the listing broker was still entitled to a commission because a ready, willing, and able buyer had been produced by the listing broker. That’s ridiculous! The seller should not have to either (1) hire a lawyer to file a lawsuit to make the buyer purchase the home, or (2) pay a commission to the listing broker. Am I wrong?
Answer: Yes. Under the standard Realtor listing agreement, the seller is obligated to pay a commission to the listing broker if there is a “ready, willing, and able” buyer of the home, i.e., all contingencies such as inspections and financing have been removed. Thereafter, if the seller and buyer voluntarily agree to cancel the purchase contract, the seller still owes the listing broker a commission. Furthermore, even if the listing broker agrees with the seller to waive any commission, the listing broker will generally owe a co-broker commission to the buyer’s broker.
Note: A seller does not have the right to specific performance of the purchase contract, i.e., to require the buyer to purchase the home. Money damages paid by the buyer to the seller are generally an adequate remedy for breach of the purchase contract.