First-time sellers: A sole mandate WILL protect you from double commission
Hi, the property was not developed at the time when I engaged two estate agents to try and find willing buyers for the property when it was built. The agents of course could not go into the property as it was just a construction site at the time.
Shortly thereafter I learned about the pro’s and cons of a sole mandate and I engaged a different agent altogether and signed a sole mandate with him.
Is there any chance of a potential double commission claim if the agent who has the sole mandate finds a willing buyer who initially engaged with one of the other two agents? Or do I need to make sure that the agents split the commission to avoid issues later on? – Byron
Hi Byron, when there are competing agents involved in a sale, it is important to determine who was the effective cause of the sale. That agent would be entitled to the commission. While the introduction to the property is an important factor to consider, it might be that it and the first agent’s actions are not the effective cause of the sale.
The agent who negotiated the eventual sale would then be entitled to his commission. There is case law where the courts found that was it not for the initial introduction the sale would not have proceeded. Other cases made it clear that the initial introduction was not the effective cause as the business acumen of the agent, the lapsing of time or changing circumstances minimised the effect of the initial introduction.
This set of facts leads to the question: Would the agent who initially introduced the purchaser to the property have been successful in closing the sale were it not for the fact that the seller in effect prohibited the first agent from marketing the property by entering into a sole mandate with a second agency?
This is a tough question to answer, and may eventually lead to litigation, and quite possibly to a commission claim by both agents. It would be wise to provide the second agent with a list of prospective purchasers who viewed the property with the first agent and request either they negotiate a commission split with the first agency; alternatively, if they are not willing to split the commission then indemnify the seller against any claims that the first agency may have.
First-time seller, got a burning question? E-mail email@example.com
Who is Sonja du Toit?
Sonja du Toit is a director at MC van der Berg Incorporated