How and When Listing Commissions are Earned

Your listing contract specifies a listing price. Your Realtors job is to bring a “ready, willing and able” buyer to present an offer. If you reach agreement with the buyer, then the agent has done his job and earned the commission. Once the sale has closed, the real estate broker gets paid from the proceeds of the sale.

If the buyer proves unable or unwilling to conclude the sale, the house is placed back on the market and the agent has to begin earning his or her commission all over again.

However, if the seller backs out after a contract is executed without valid cause (perhaps he simply changed his mind and decided not to sell or that he wants more for his home), the listing broker has still earned the commission. In this case the real estate agent and/or his broker may want to be paid. Even though you did not actually sell your home, you are liable for the commission. Therefore, it is very important to carefully consider every detail when signing and accepting an offer to buy your property.

If you have any questions regarding the legal issues related to your listing agreement or a contract to purchase your home, you should always consult a certified real estate attorney. Real estate agents are forbidden from practicing law and cannot advise you on your legal rights.