An agent has an exclusive agency agreement but the vendor finds their own buyer without the agent's involvement. In this scenario, who is entitled to commission?

Q: What is the correct answer to: An agent has an exclusive agency agreement but the vendor finds their own buyer without the agent's involvement. In this scenario, who is entitled to commission?

The correct answer is No commission is payable to the agent. Option B is correct because under an exclusive agency agreement, the agent only earns commission if they or someone from their agency introduces the successful buyer. When the vendor independently finds and negotiates with a buyer without any agent involvement, the fundamental condition for commission payment is not met. The agent has not performed the service that triggers their entitlement to commission - namely, introducing or procuring the buyer. This principle is well-established in Australian real estate law and protects vendors from paying for services they didn't receive.

Q: What background knowledge is needed for this Agency Practice question?

Exclusive agency agreements are one of three main types of listing agreements in Australia, alongside exclusive listing and open listing. Under exclusive agency, the vendor grants one agent the right to market and sell their property, but retains the right to sell independently without paying commission. This differs from exclusive listing where commission is payable regardless of who finds the buyer. The agreement must clearly specify commission conditions, and agents must ensure vendors understand their rights. State legislation governs these agreements, with consumer protection laws requiring clear disclosure of terms and conditions.

Q: What is a good way to remember the answer to this Agency Practice question?

Think 'DIY = Don't pay If You find the buyer yourself.' In exclusive agency, if the vendor does it themselves (DIY), they don't pay commission. It's like hiring a real estate agent but keeping your 'For Sale by Owner' rights - you only pay if they actually help you. When you see exclusive agency questions, immediately think 'DIY Exception' - ask yourself 'Did the agent introduce the buyer?' If no, then no commission. If yes, then commission is due. This helps distinguish from exclusive listing where commission is always due.

Q: What exam tip applies to this Agency Practice question?

Look for the key phrase 'exclusive agency' and immediately identify who introduced the buyer. If the vendor found the buyer independently, no commission is payable. Don't confuse with exclusive listing agreements.

Q: How does this Agency Practice concept apply in Australian real estate practice?

Sarah lists her property under an exclusive agency agreement with ABC Realty. While the agent is marketing the property, Sarah's neighbor mentions they know someone interested in buying. Sarah directly negotiates with this buyer and completes the sale without involving ABC Realty. Despite having an exclusive agency agreement, Sarah owes no commission because she independently sourced and negotiated with the buyer. The agent performed marketing services but didn't introduce the successful buyer, which is the trigger for commission entitlement.

Question

Agency PracticeAgency AgreementsMEDIUM

An agent has an exclusive agency agreement but the vendor finds their own buyer without the agent's involvement. In this scenario, who is entitled to commission?

Answer Options

A

The agent is entitled to full commission

B

No commission is payable to the agent

C

The agent is entitled to half commission

D

Commission is negotiable between parties