Appointing a Real Estate Agent

Selling your house is often one of the biggest financial decisions you will make.  It follows that the appointment of a real estate agent to sell your home is also an important decision.  The Property Occupations Act regulates all real estate agents and agencies in Queensland.  It provides protection measures to both buyers and sellers.

When you contact an agent to arrange the sale of your property, one of the first things that will happen is the agent will ask you to “appoint” them.  It is important to note that an agent cannot recover any commission from you unless they are properly appointed.  This involves entering into a written agreement with the agent on a standard form.  The agent must ensure you are given a signed copy.  When completing the form, ensure the agent has filled in details about their appointment.  The appointment will usually be for a single appointment (such as the sale of a particular property).  This part of the form can be used to include any conditions, limitations or restrictions on the performance of the service.

One of the most important and least understood components of the agent appointment is the distinction between an open listing and an exclusive or sole agency.  In an open listing, you are able to appoint more than one agent (sometimes you might have noticed two agents marketing the same property).  An open listing can be terminated by you or the agent at any time by the giving of written notice.  An agent appointed on an open listing will only be entitled to commission if they are the effective cause of sale of the property (this will be discussed later).  Because agents will be competing with each other for your sale, this is the appointment least favoured by agents.

A sole/exclusive agency involves appointment of a single agent for a specified period of time.  That period of time is negotiable, but cannot initially exceed 60 days.  The agent can be reappointed for a further term if agreed.  Be careful to note what is placed on the appointment form, as there is a provision which allows the agent to continue their appointment as an open listing after the expiry of a sole/exclusive agency.  The usual rules for an open listing will then apply once the sole/exclusive agency ends.  Because agents are not competing with other agents for the sale of your property, this is the method of appointment most favoured by agents.

There is a slight difference between a sole and exclusive agency.  Under an exclusive agency, the agent will be entitled to commission whether or not they are the effective cause of sale.  This contrasts with a sole agency, where the agent is entitled to commission unless the seller is the effective cause of sale.  The question is then, what is the effective cause of sale?  There has been much legal debate over this issue in the Courts.  It is difficult to provide a general guide, as each case depends on the circumstances of that particular matter.  The Courts would generally be looking to see if the agent was the one who brought about the sale through its agency.  Generally the agent needs to do more than simply introduce the buyer and seller.

It is important to recognise (particularly in the case of exclusive and sole agencies), that if an agent has been the effective cause of sale, even if they were not responsible for the final negotiations or signing up the purchaser, the agent may still make claim for their commission.  It is vital that when appointing an agent, you ensure that the appointment is done correctly.  This will potentially save you a lot of money, time and stress when a contract for sale is entered into.

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