How Realty Commissions Work

Regarding the May 31 “Real Estate Q&A;” item headlined “No Commission Owed to First Agent,” we would like to clarify how commissions work in California.

Under the previous version of the California Assn. of Realtors’ listing agreement, a broker would not be compensated if the seller had listed the property with another broker after the expiration of the first broker’s listing.

However, the listing agreement adopted last year includes a “protection period” for the first listing broker. Here’s how it works:

The broker and the seller decide--when they first sign the contract--how long this “protection period” will be (30 days, 60 days, etc.).

When the listing agreement expires, the broker has five days to give the seller a list of all the prospects with whom the broker has had negotiations. Simply showing the house does not count.

If any of the people on the list buy the house within the protection period, a commission will be owed to the first listing broker.

This is true whether the property has been re-listed with another broker or not.

If you switch brokers at the end of a listing, you should specifically exclude any of the buyers on the first broker’s list so that you do not owe both brokers a commission.

Check your contract carefully, however, as the contracts of individual real estate brokerages may vary on some of these issues.

JUNE BABIRACKI BARLOW

Vice President and

General Counsel

California Assn. of Realtors