Question

Broker Marty listed Jane’s home and showed it to Buyer Paul. Their listing agreement specified that Marty would receive a 7% commission and the safety period was set at six months after the listing expiration. After the listing expires, Jane lists her home with Broker Sarah for an agreed upon 8% commission rate. Sarah sells the home to Buyer Paul five months later. Which statement is true?

Answer 1

Answer:

Jane owes 8% commission to Broker Sarah and 7% commission to Broker Marty

Explanation:

Since Marty showed Paul the house while his agreement with Jane was valid, Paul is a prospective buyer that was originally registered as such by Marty. Since the safety period is 6 months, and Paul eventually bought the house only 5 months after Marty's agreement expired, Paul was still Marty's prospective buyer for up to 6 months.

Since Sarah negotiated the sale with Paul, Paul is also Sarah's buyer. If Paul had directly negotiated with Jane, she would only a commission to Marty.

Generally, when properties are listed again with different brokers, the list of prospective buyers form the previous broker is passed to the new broker. The seller of the house can request that the new and old broker get in touch and share a commission if any prospective buyer returns, but that has to be done before the sale is closed. It cannot be done afterwards, since the seller will then have to pay double commissions.