Introduced to the Property

The term “introduced” is used by the real estate agent to determine the point at which the vendor becomes liable to pay the commission.

By using a carefully worded definition of “introduced”, the commission is able to claim the commission in the most unlikely of circumstances.

When combined with the escorted inspection the “introduction” puts the real estate agent in a position to use the law of contract to enforce payment, leaving the vendor unable to challenge the fairness of the real estate agent’s claim.

When Does An Introduction Occur?

The Exclusive Sale Authority, provided to commission estate agents by the Real Estate Institute Of Victoria, contains a number of “Agreed Conditions” in classic fine print. Condition 1.9 of the Agreed Conditions states:

“Introduced to the Property” means that the person was made aware that the Property was available to purchase irrespective from whatever source and without limiting the foregoing a person shall be deemed to have been introduced to the Property by the Agent if the person became aware that the Property was available for purchase as a result of viewing, hearing or reading any advertisements of whatever nature or medium, any boards, placards or other literature referring to the availability of the Property that were connected to the Agent in any way.

A careful examination of the definition confirms that the real estate agent can claim commission in nearly every conceivable situation where a purchaser buys the property. In other words, once the exclusive sale authority has been signed, the commission is “in the bag”.

A second definition makes the commission payable even where the sale does not proceed. (See the definition of “Sale” in the exclusive sale authority.

How The Definition Can Be Exploited

The significance of a person having been “introduced” to a property is demonstrated by an actual case of deceptionby a real estate agent.

The real estate agent had been engaged by the vendor to sell a property worth close to $500,000 and the real estate agent had expected a commission of at lease $18,000.

The real estate agent, knowing that it was a criminal offence for him to sell a client’s property to a relative without disclosing the relationship, proceeded without first obtaining the necessary authority.

While the real estate agent’s relative was considering the purchase, another purchaser signed a contract and bought it first.

After some months of wrangling over finance, the purchaser cancelled the contract. However, the real estate agent made no attempts to tell the first purchaser (his relative) that the property was again on the market.

Some time later, with the real estate agent exclusive sale authority having expired, the first purchaser happened to meet the vendor at a function and congratulated her on having sold the property. When told that the property was again on the market, the first purchaser made an offer and it was accepted.

The vendor attempted to do what she thought was “the right thing” by approaching the real estate agent to confirm that no claim would be made for a full commission, given that the real estate agent had really done nothing to bring about the second sale. (In fact, the real estate agent had worked against the vendor by telling the first purchaser that the property was unavailable, and allowing him to continue believing this even after the sale had been cancelled – the real estate agent should have immediately contacted other interested parties instead of simply doing nothing).

The real estate agent, realising that he was in a position to deceive the vendor, falsely told the vendor that she was liable to pay the full commission. The real estate agent knew that no commission whatsoever was payable, because the authority required (when a real estate agent sells a client’s property to a relative) had never been prepared. The real estate agent also knew that the vendor would not sign the authority if asked to, because the real estate agent had played no role in bringing about the sale (remember that no attempt had been made to inform the purchaser that the property was again available for sale, and the sale would never have occurred had it not been for the change meeting of the vendor and the purchaser).

Frustrated and angered by the real estate agent’s attitude, the purchaser contacted us for legal advice.

Because of the complexities created by the definition of “introduced”, and the likelihood that the real estate agent would take the matter to court (most consumers would rather pay the amount demanded than to incur the costs of defending a matter in court, unless a win can be assured) we engaged a barrister to prepare precise advice on the matter.

Eventually the real estate agent backed away, but not before writing a letter designed to “guilt” the vendor into paying.

In a fit of commission rage the real estate agent wrote the following passages:

“We refer to your letters regarding the sale of the above property to a purchaser introduced by one of our sales team. We believe your clients have behaved in an
unethical manner in order to avoid payment of our selling fee.”