Costly Mistakes and Official Sources
Agency agreement traps: the clauses that cost sellers money
The real estate agency agreement clauses behind most commission and marketing disputes in Australia: exclusive periods, introduction clauses, continuing authority and more.
Most disputes between sellers and agents come from a handful of clauses in the agency agreement (called a sales authority, appointment or selling agency agreement depending on the state). The ones to read word by word are: the exclusive period and how it ends, any continuing authority after that period, the introduction clause that can make commission payable after the agreement ends, when commission is earned (exchange or settlement), and marketing that is payable whether or not the home sells. If you change agents or a sale falls over, these clauses decide whether you pay once, twice or not at all.
This guide is part of costly mistakes when selling a house. For how commission is set in each state, see agent commission by state.
Clause 1: the exclusive period
An exclusive (sole) agency gives one agent the right to sell for a set period. If you sell to anyone during that period, including a buyer you found yourself, the agent can usually claim commission.
What to check:
- Length. Ask why the period is needed. A shorter period with an option to extend keeps the agent motivated.
- Ending it. How much written notice, and from when?
- State limits. Some states regulate the maximum exclusive period or the notice to end it. Check with your fair trading regulator before agreeing to a long period.
Clause 2: continuing authority
Many agreements say that after the exclusive period ends, the agent continues as a non-exclusive or continuing agent until you terminate in writing. If you then appoint a second agent and both introduce the same buyer, you could face two claims.
Fix: when you end the agreement, give written notice to the agency, keep a copy, and ask for written confirmation.
Clause 3: the introduction clause
An introduction or "effective cause" clause typically says commission is payable if, within a set period after the agreement ends, the home is sold to a buyer the agent introduced.
Illustrative example: Agent 1's exclusive period ends; you appoint Agent 2. A buyer who inspected with Agent 1 buys through Agent 2 two months later for $820,000. Both agreements charge 2.2%.
| Claim | Amount |
|---|---|
| Agent 2 commission | $18,040 |
| Agent 1 commission under the introduction clause | $18,040 |
| Possible total | $36,080 |
Whether Agent 1 is entitled depends on the exact wording and the law in your state, including whether that agent was the effective cause of the sale. Many disputes end in negotiation, but they can reach a tribunal or court. Fix: before appointing a new agent, ask the first agent for a list of buyers they introduced, and give it to the new agent. Ask the new agent to agree not to claim commission for a sale to those buyers, or to share the fee.
Clause 4: when commission is earned
| Agreement says | What happens if the buyer defaults after exchange |
|---|---|
| Payable on settlement or completion | No settlement, usually no commission |
| Payable on exchange or "when a binding contract is entered into" | Commission may still be owed, although you have not received the price |
In some states the law or the standard forms make commission payable only on completion in most cases; check the form used in your state. Ask for "commission payable on settlement only" in writing.
Clause 5: marketing payable if unsold
The agreement may say marketing is payable on signing, within a set period, or at settlement, and whether it is payable if the home does not sell. If it is payable regardless and you later change agents, you may pay for two campaigns. See property marketing costs.
Clause 6: estimated selling price and price changes
Agents must give an estimate of the selling price in the agreement in most states. In Victoria and New South Wales, if the estimate changes during the campaign the agent must update it in writing and adjust advertising. Keep the estimate: if an agent persuades you to accept far less than the estimate, ask for the evidence.
Clause 7: rebates and related services
Some agreements authorise the agent to arrange services such as styling, photography or finance through related companies. Ask for any rebates, commissions or benefits to be disclosed in writing, as state agent laws require.
Before you sign: a five-minute check
- Circle the commission rate and confirm it includes or excludes GST.
- Find the exclusive period and the termination clause.
- Find any continuing authority clause.
- Find the introduction clause and its time limit.
- Find when marketing is payable and whether it is refundable.
Use the selling costs checklist to tick them off. In New South Wales you can still cancel within the cooling-off period after signing: until 5 pm on the next business day or Saturday.
Frequently asked questions
Can an agent hold me to an agreement if they did nothing?
Generally yes for the term of an exclusive agreement, but poor performance can be a reason to negotiate a release. Some agreements include a performance or satisfaction clause; ask for one.
What if I find a buyer myself during the exclusive period?
Under most exclusive agreements, commission is still payable to the agent. Under an open listing it is not.
Do I have to pay if the agreement is invalid?
In several states an agent who does not have a properly completed written agreement may not be entitled to commission. Get advice from a solicitor or your fair trading regulator.
Where do commission disputes go?
To the agency first, then the state regulator's dispute service or tribunal. See complaints about agents and conveyancers.
Official sources
- NSW Fair Trading — agency agreements, cooling-off and commission
- Consumer Affairs Victoria — sales authorities and estimated selling price
- Queensland Office of Fair Trading — property agent appointment forms
- NSW Civil and Administrative Tribunal — consumer and commercial disputes in NSW
- VCAT — civil disputes in Victoria
