Does Broker get commision on money held in escrow if the sale is not made?

Asked by Rydag Jones, El Paso, TX Wed Nov 19, 2008

When buyer agrees to pay non refundable amount to be held in escrow and the sale falls through does the broker get a commision on that money?

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Jose E Garza, , El Paso County, TX
Wed Nov 19, 2008
TREC promulgated forms covers this situation under paragraph "Broker's Fee". However, my advise to you would be to consult with an attorney in the case of any dispute being present.
Title companies will hold all earnest money deposits until all parties involved in the transaction agree on "who gets what".
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Bruce Lynn, Agent, Coppell, TX
Wed Nov 19, 2008

I've never heard of this. Unfortunately in most cases no one makes any money off of it.
The only thing I can think of is if the title company had spent money on a survey or HOA documents or resale certificate, they might charge for that...actually it would go on to a 3rd party. I would think though any normal professional title company would give you an accounting of that money.
Most of the time though the agent and title company are out money when a deal falls through and they just have to eat the loss. It's not fair, but that's just the way the business works in most cases.
Now there is some possibility that you have signed something else... that would obligate you to some fee for services. I've never heard of it or seen it, but potentially possible and perhaps justified.
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Josh M. Boggs, Agent, San Antonio, TX
Wed Nov 19, 2008
Mr. Jones,

The answer would normally be NO, the listing broker usually would not receive any earnest money locked up in escrow. However, you will need to look at your listing agreement to see if there are any other details in that agreement that may allow the broker to receive a cut of that money. It is possible, but usually highly unlikely.

Best of luck,
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Glen Hagen, , Suffolk County, NY
Wed Nov 19, 2008
That's a great question and the answer depends on the reason and at what point the sale is not made.

If a contract is consumated and the sale falls through because the buyers were unable to obtain a mortgage, then no commissions would be owed, assuming the buyers made a bone-fide effort to obtain a mortgage.

If, however, the seller's changed their mind, and decided not to sell, they could be responsible for Realtor commissions.

If in doubt about your particular circumstances, you would probably want to check with a local real estate attorney.
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Rick Snow, Agent, El Paso, TX
Wed Nov 19, 2008
It really depends on what your listing agreement says and why the deal fell through. If it fell through because you (assuming you are the seller) decided not to sell or somehow breached the listing agreement, you could be obligated to pay the commission anyway. However, earnest money is distributed in accordance with the terms of the contract. You may need to discuss this with an attorney since real estate professionals are prohibited from giving legal advice.
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Josh Thomas, , Austin, TX
Wed Nov 19, 2008
No. Brokers only receive commission when a sale is made. If the sale falls through, the money in escrow is subject to performance of the contract stipulations. Typically, this money will go back to the buyer or back to the seller, depending on the conditions and timing.

Hope this helps.
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