When is the realtor entitled to a commision?

In most residential real estate contracts, the realtor is entitled to a commision if the sellers agent procures a buyer that is ready, willing and able to offer the seller the asking price or greater. Lets say, we are asking $450,000 for our home and someone offers $450,000 but wants us to pay $5,000 of his closing costs. Are we obligated to pay the realtor the full commision even if we turn it down since the buyer offerred the asking price, even though the offer nets out to only $440,000. Or worse, what if the buyer makes and offer that is $15,000 over the asking price but with the ridiculous demand that we be out of the house in 2 weeks. Would we still be oblligated for the commission?

It has nothing to do with what the buyer offers … .it only has to do with whether you sell the house. If you an accept an offer and close then you owe your selling agent commission

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Most RE markets have boiler-plate contracts with T’s & C’s (Terms and Conditions) preapproved by all participating brokers, most of those listing contracts have the terms of the “offer to sell” clearly defined and normally refer to the T’s & C’s of the offer to buy. Any exceptions are usually addressed in the “additional T’s & C’s” section of the offer to sell contract.

The “offer to buy” contract usually works the same way but is a contract between principals while the listing contract is between the broker and the owner/seller. The words in the listing contract usually state that the owner/seller is obligated to pay a fee to the listing broker and the sales commission for the selling broker is usually offered in the MLS listing and detailed further in the “offer to buy.”

Once the Seller accepts an offer it becomes a sales contract and they are usually subject to good faith performance as outlined in both the listing contract and in the sales contract. Technically speaking, once the seller has accepted an offer and agreed to all the terms and conditions in that offer, they are legally required to go through with the sale and transfer of title as agreed in the signed contracts by all principals and their agents.

If the extra costs outlined in the OP are in an offer to buy and agreed to by all principals it is a contract and subject to whatever is agreed upon in that contract. The seller should read all the stuff that comes after “seller agrees” in the offer to buy before signing it and accepting the offer. To change the offer the seller would make a “counter offer” instead of accepting the offer as it is written. Then If the buyer agrees, it becomes a “contract to buy.”

If, after agreeing to and signing the sales contract either principal refuses to act in good faith in complying with the terms and conditions of the sales contract, they are subject to a suit for “specific performance” by the other principal.

That being said, it rarely happens that the matter goes to court and is usually settled between the principals. The same goes for listing contracts, they rarely end up in court, but occasionally they do. In my 12 years in the business I was never involved in a specific performance lawsuit.