Sometimes, working with a real estate agent for weeks or months would not result in a successful transaction. Circumstances may lead to a transaction falling through. You may be wondering: Do you still have to pay your agent?
Here, we explain what happens when real estate deals fall through. We'll also review fees you may or may not owe your agent if the transaction fails.
Do You Pay Agent Fees if You Don't Purchase a Home?
Real estate agents typically earn a commission at closing. This means you won't have to pay if you don't purchase a home. However, the terms will depend on your contract.
The National Association of Realtors (NAR) introduced changes to their regulations. This includes requiring a written buyer-agent contract. This document must outline the agent's commission and the terms of service.
It's crucial to read the agreement carefully. Look for terms that allow the agent to collect fees if a deal fails.
It is also important to understand how you are billed. Some agents might bill hourly rates. Some might charge a flat fee. Others may collect commission after closing.
Do You Pay Agent Fees if You Don't Sell?
The answer depends on what's written on your contract. Real estate agents typically earn a commission after selling a home. They are not owed any fees if the house does not sell.
However, some brokerages have different policies. For instance, brokers may require reimbursements for marketing, home tours, and administrative work even if the home does not sell.
Other brokers would also require sellers to pay the fees if they find a "ready, willing, and able" buyer. This means any buyer who has submitted an offer acceptable to the seller. It could also mean anyone financially capable of completing the transaction.
The terms specifying when a seller is liable to pay the fees should be in the listing agreement. Often, this includes sellers who:
- Change their mind and pull their listing
- Has a spouse refusing to sign the deed
- Listed a home with uncorrected title defects
- Committed fraud related to the transaction
- Fail to deliver the property to the buyer within a certain period
- Mutually agreed to cancel the transaction with the buyer
