I am a home seller too and I have a "non-exclusive" listing agreement (whoops, HAD) to sell a home in Oak Park (OP). Non-exclusive means that if I find the buyer, I don't pay anyone any commission.

I'm looking to sign an exclusive listing agreement to sell my home in Western Springs (WS) with Realtor Cathy. I will also sign a new exclusive listing agreement to sell OP with Realtor Patti. I don't WANT to sell WS but I need to because OP hasn't sold. If WS gets a contract and then OP sells, if I "change my mind" to sell WS I will owe the commission. This is a concern to both me and Cathy but as I told Cathy, these are problems we WANT to have, right?!

Lets say Cathy brings me a buyer at full asking price with a financing and inspection contingency and I ACCEPT the offer. Then Patti sells OP for me and I don't want to sell WS. I am contractually obligated to sell WS to the buyers and with a different listing agreement contractually obligated to pay commission Cathy commission. If the home inspection reveals a basement flooding issue that the buyers are requiring me to fix and I refuse to, I do not have to sell my home or pay the commission. However, if the buyers say, "never mind" and waive the inspection contingency, I have to sell.

Now, lets say the buyer's lender is dragging their feet and the buyer hasn't received what is necessary to remove the financing contingency and they ask for a two day extension. I would refuse and on the day the financing contingency expires, the sales contract is null and void and Cathy has NOT brought me a buyer so I don't owe commission.

Back to YOU, CHERY. As you can see, this is very tricky. IF you have NOT accepted either offer and your listing agreement is a non-exclusive listing, depending on what the contracts says will make a big difference. If the full price offer has NO contingencies, i.e. "I'll pay you cash today", then there is a 99% chance you owe the commission but you do NOT have to sell to the this buyer because you do not have a contract with them. If the lower priced offer is cash today and the full price offer is financing in 60 days, you would be better off with "a bird in the hand" and sell to the cash offer. In this case YOU found the buyer, not the agent.

Lets say you accept an agreement from YOUR buyer for 15% below your asking price. An attorney/judge/mediator then reads your listing agreement and says, you owe 10% commission of your full asking price to the agent. You cannot then say, "OK, I'll sell it to the agent's buyer at full price." You are now legally obligated to sell to your buyer.

So, if your asking price was $100,000 and the agent's buyer offered $100k and your buyer offered $90k, you would net the same amount. You would have to choose which buyer based on other factors. If you agreed to sell to your buyer for $85k and it turns out you owe commission because the agent brought you a buyer even though you didn't sell to them, with a non-exclusive listing agreement, you would owe the agent $10,000 (10% of their buyer's price). If you have an exclusive listing agreement, it doesn't matter which buyer buys, the agent gets 10% of the sales price, or $8,500.

I'm not an attorney and I haven't read your listing agreement; I do not know the answer to your question. However, I can guess that your AGENT is not an attorney either. Your agent may not know the answer to your question either. If you are choosing to sell to your buyer just to save the commission, the ethical question rests on you, not the agent. If the agent is entitled to commission, is a LEGAL question.

Do the right thing looking at all sides of the issue, yours, your agent, the two buyers and the law. DO NOT sign an agreement to sell without speaking with an attorney unless you are prepared to pay the agent commission.

Good luck and keep us posted.
Ruth

Deborah answered your question pretty thoroughly and brought out some excellent points. Ultimately, it boils down to the terms in your contract with your agent. (listing agreement)

Happy New Year!

Great answer and well said Deborah!

It depends upon the terms of your listing, and I don't have a copy of your lisitng agreement.

However, I can tell you that it commonly found in the terms of a lisitng agreement that yes, you would owe the commisison to the broker (agent). Your agreement may be different.

You might have an Exclusive Right to Sell agreement, where the broker is due commission regardless of source of buyer, unless any specific exclusions are set forth.

You might have an Exclusive Agency agreement, that says you owe a fee if the broker produces a buyer, but do not owe a fee on that transaction if you find your own. If, you agent produced a buyer, yes.....they fulfilled their end of the agreement and yes, you would owe the commission. While commissions are often paid at a closing table, many listing agreements (even most) define the contract terms and the commission as earned when a buyer is produced. If the agent/broker produced a buyer, yes, a commission could be owed, even if you do not sell to that buyer.

Imagine the following. I am not suggesting that you had your buyer in hand before listing. But, I offer the following so you can understand why the terms of the listing agreement are based upon producing a buyer and not closing.

Seller A has a buyer who will pay them "X". Seller wants more $$; buyer won't meet the price. Seller hires a Realtor and lists the property. Seller does not tell Realtor about prior offer. The listing agreement states if the seller finds a buyer on his own, no commission is due on that transaction. Realtor finds a buyer at more than X, and seller goes back to his first buyer, who now says OK, I will meet the competiton and give you that price. Wouldn't it be unethical to use a Realtor to create competiton and push the original buyer, but not get paid?

An agent I know was once hired by a seller who made it impossibe to show the property. She asked me for help and I actually confornted this seller, letting him know I was gettting the feeling he really did not want to sell. As it turned out, he didn't. He listed his house to give the appearance that he was intending to sell for business and legal residency status reasons. In other words, he had no intention of ever selling (and has not). Meanwhile, someone was spending a lot of $$ and time promoting his property.

Listing agreements are generally written to be fair to all parties. If you hire a broker/agent to find you a buyer based on a contingent basis, and they do that, yes, it is ethical for them to expect payment.