There are many times when a property is listed for sale but it really “never gets sold”. And, that was expected!
So, how does the Listing agent get paid?
The Listing should be set up with a significant Cancellation fee.
Let’s assume that you are a private lender and you have loaned money to someone who has purchased a house. Now, they are in arrears and you are just not getting paid. This significantly affects your cash flow and ultimately you will have to do something. However, you appreciate that sometime after the Notice of Power of Sale and your retaking of possession to sell the property, they will refinance and pay you off.
This means that your Listing agent did a great deal of work and never got paid since there were no actual Offers accepted.
So, rather than the “valid Offer” being the trigger for the payment of commission, you will make the “Cancellation” or “Termination” of the contract as the trigger for payment of the commission.
That amount could be a certain percentage of the Listing price.
That means that this payment will be added to your costs and expenses when the mortgagor pays you off and discharges your mortgage or brings your mortgage into good standing.
The real pressure point was the Listing. Without the work of your Listing agent, you never would have been paid. So, this is a very reasonable approach. It works, and Courts will endorse it.
Brian Madigan LL.B., Broker