The dangers of using more than one agent to sell a property were highlighted once again recently when the appeals court in Bloemfontein found that the agent who had purportedly sold a Durban North home was not the effective cause of sale. Who cares, you may ask? In this case, the sellers most certainly experienced a little sellers’ remorse by being forced to pay a whopping R230 000 plus interest and legal fees to the agency who had first introduced the buyer to the property; this over and above what they had already paid in commission to the agent who subsequently got the buyer to put pen to paper.
Numerous estate agents and sellers have fought the effective cause of sale battle in South African courts for years and the outcome of the various cases has left a great deal of confusion in its wake. Essentially this is not because the law is hazy on the topic, but that each case is different and as such is judged on its own merits.
For example, the courts have found that just because an agent initially showed an interested party a property that they ended up buying does not necessarily make that agent the effective cause of sale. However, the courts usually find that this is the case unless there are extenuating circumstances. Sellers therefore need to be extremely careful as who views the property with which agent.
It is easy to become confused as to who introduced a buyer to a property, particularly if more than one agency is marketing the home. Very often, buyers will not mention that they have already viewed the property unless asked. Unscrupulous agents often won’t bother mentioning the fact either, preferring to pocket money that, legally-speaking, they haven’t rightfully earned. Buyers also often incorrectly assume that the agent is working for them and that they have the right to choose which agent they will deal with. This may be true if they have appointed an agent to find them a property that they have not seen before with a different agent. That said, any good agent will have a clause in their sale’s contract that confirms that the buyer has not viewed the property with another party.
So where does this leave the seller? Usually out-of-pocket. In many cases the seller is left holding the bag and has to pay the full commission to both the agent who sold the property as well as the one who first introduced the buyer. There is of course legal recourse against the buyer, but litigation is expensive and owing to the amounts involved, more often than not involves the costs of a High Court trial.
The easiest and perhaps the safest option available is for sellers to only employ one agent/agency to do the job. If multiple agents are attempting to sell the property then the seller needs to ascertain which agent brought which buyer around. It goes without saying that sellers should never attempt to enter a private deal with a buyer who has previously seen the property with an agent.
If a seller becomes aware that a buyer has already seen the property with another agent, they should inform both the buyer and the new agent that they will not enter into a sales agreement without letting the agent who initially showed the property know. While the buyer and the agent do not stand to lose anything as a result of their actions – the chances that the seller will lose a large sum of money are great.
Times are tough and buyers are pretty thin on the ground. Unlike the boom times when there were high volumes of buyers out there the current slower market has made it far easier for sellers to keep tabs on who is coming into their homes. To simplify the matter, sellers using multiple agents should ask them all to provide feedback as to who has viewed the property. This easy exercise will ensure that sellers are not putting themselves at risk and could potentially save them a fortune in the process.