Agents right to commission depends on clever not hard work

In disputes about estate agents’ commission the critical factor that will determine who is entitled to commission is: “Who was the effective cause of a successful transaction?”

And the question, according to Libo van Aswegean, as to whether or not an agent was the effective cause often has more to do with clever work than with hard work. The agent may not even have had to take part in the sale negotiations himself.

For instance, van Aswegan claims in his legal column in the April edition of the Aida in Action newsletter, the court held in a previous case that the effective cause in a sale was the suggestion by an agent that a wall could be removed to make room for a pool table.

An agent’s claim for commission can even succeed in cases where the eventual buyer is not the person whom the agent introduced to the property, but someone who became involved through the efforts of the person who was introduced at first.

An agent will be entitled to commission, for example, if he introduces someone to the property who then tells a friend who ends up buying the property directly from the seller. In such a case it may be argued that the seller would not have sold the property to this particular buyer had he not benefited from the agent’s reputation, business connections and efforts.

Matters may become trickier in cases where financial difficulties are encountered. It must be pointed out that almost every transaction brought about through the efforts of an estate agent is preceded by protracted financial negotiations regarding the selling price, as well as the method and time of payment.

Success is often only achieved through the intervention of third parties and often the agent himself does not take part in such negotiations. But it would be wrong to conclude that the agent was therefore not effective in bringing about the ultimate sale.

The same criteria apply in cases where more than one agent receives a mandate to sell a property. It is not necessarily the first agent who introduced the eventual buyer who is entitled to commission. Once again, it has to be determined which agent was the effective cause.

For example, one agent introduces a possible buyer but nothing comes of it and, after a long time has elapsed, the same person is re-introduced by another agent. If the second introduction leads to a successful transaction, it cannot be said that the first introduction was the overriding factor in the sale. The second agent can be held to be the effective cause, and is thus entitled to commission.

In practice it often happens that an offer submitted by one agent is rejected because it does not match the asking price. This agent will not be viewed as the effective cause if another agent succeeds in getting a higher offer from the same buyer after having secured better finance.

To sum up - to be deemed the effective cause, agents should play an active role from the time the property is introduced to the buyer until the transaction is registered. Excellent service increases the likelihood of success and removes any doubt about who the effective cause of the sale is.
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