Payment of A Commission or Fee
Although the terms of the contract could vary, usually the payment of a commission (or fee) to the brokerage is contingent upon:
- the successful negotiation of a purchase contract between a satisfactory buyer and seller and the subsequent ability and willingness of the buyer to close the deal, or
- finding a satisfactory buyer who is ready, willing, and able to pay the full listing price (or more) for the real estate for sale without any contingencies.
If the seller refuses to sell the real estate when one of the above two conditions applies, it is typically considered that the real estate agent has done their job of finding a satisfactory buyer and the seller must still pay the commission, although the details are determined by the listing contract. Unless closing (or "settlement" or "close of escrow", as it is known in some parts of the country) is a condition of the listing agreement, the buyer's failure to complete the transaction may not require the seller to pay a commission to the broker.
The commission is usually a percentage of the sales price of the property ranging from 2 or 3% up to about 10%, but usually in the range of about 3 - 7% for houses. The commission could also be a flat fee or some combination of flat fee and percentage, particularly in the case of lower-priced properties, vacant lots, or other unusual real estate.
The commission is paid by the seller to the listing real estate broker, who will then compensate their listing agent and any co-operating brokers/agents from this commission by separate agreements with them.
Read more about this topic: Listing Contract
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