Do You Know What Might Be Hiding in that Real Estate Listing Contract?
“Don’t sign anything until an attorney has an opportunity to review the document”
That includes listing contracts, and here’s one example why.
On July 10, 2015, a real estate company received a $378,000 commission without actually selling the property. The Wisconsin Supreme Court made the decision based on the language of the listing agreement between the seller and the realtor and the “enforceable contract” in place against the buyer. Ash Park LLC v. Re/Max Select LLC (July 7, 2015).
The seller entered into a standard form listing contract that stated Re/Max would receive six percent commission on the purchase price if Seller “sells or accepts an offer which creates an enforceable contract for the sale of all or any part of the Property.” The Seller received an offer for $6.3 million and the Seller accepted the offer. The closing never occurred.
The Seller sued the Buyer and the parties settled for $1.5 million. Re/Max then requested its commission based on the $6.3 million purchase price on the accepted offer to purchase. The Circuit Court ruled that the contract did not amount to an enforceable contract. The Appellate Court reversed, stating that the contract was enforceable.
The Supreme Court unanimously affirmed (6-0) with one concurring opinion and noted that the listing contract only required the Seller to enter into an enforceable contract, not an actual sale.
Why It Matters
The Seller signed a standard listing contract. The standard listing contract has a provision that allows the real estate company to recover a commission without actually selling your property. These standard listing contracts are used by most realtors in Wisconsin. Without allowing an attorney to review your listing agreement, you may be opening yourself up to paying a commission without actually closing on the sale of your home.
Many other legal issues need to be addressed by you before you sign a listing agreement. Please bear in mind, the listing agreement is a legal document – a binding contract.