In an ideal world, the owner wants to have the opportunity to terminate the offer for a reason (or not). It is understandable that many brokers oppose it, which is why negotiations start here. It is customary to have some kind of notice to avoid immediate termination. Negotiation of termination “for reason still free” is also common. A savvy broker will generally require that he or she be authorized to collect the commission if any interested person he or she identifies. Many brokers will also try to reimburse all out-of-pocket fees if they are terminated for no reason. The above points are a snapshot of the negotiable problems that arise in list agreements. Many other problems may arise, and the above is intended to highlight the problems that, as we have seen, most often give rise to litigation. It is important to review and negotiate the listing agreement carefully. Remember, all of this is negotiable, and the owner should not hesitate to negotiate to protect himself. The landlord must ensure that the broker meets certain requirements to ensure that the prospective buyer/tenant has actually been purchased by the broker. A simple way to do this is to ask the broker to submit a written list of all interested parties for whom the broker intends to claim a commission. Such a list should be distributed very quickly after the end of the list contract (as in days instead of weeks).
The types of interested parties should also be defined to include only interested individuals who have actually made an offer or letter of intent, who have actually considered the property with the broker, or who receive personally discussed offers, etc. The owner does not want to get stuck with a list of interested people of five thousand people, because the realtor sent a massive explosion of emails to all in his database. Brokers are often concerned that an unscrupulous seller might try to avoid a commission until the list expires before entering into a contract with a potential buyer introduced into the property for the duration of the listing. For this reason, most listing agreements provide that the seller is required to pay his commission to the broker if, at the expiry of the list, the seller enters into a contract with a buyer who was introduced into the property while the offer was in effect. While such a provision is reasonable in the concept, the seller must be sure that it is appropriate when applied. The commission is paid by the seller to the listing real estate agent, who then compensates his broker and all the brokers/agents cooperating with that commission through separate agreements with them. The date of payment of commissions is crucial for commercial listing leases. The owner should carefully consider when the commission obligation begins.