New York Real Estate Salesperson ExaminationLaws of AgencyMedium
A seller engages a real estate broker to sell their property under an exclusive agency agreement. If the seller finds a buyer on their own without any assistance from the broker, what commission, if any, is the broker entitled to?
- AA commission equal to 50% of the agreed amount.
- BThe full agreed-upon commission.
- CNo commission.
- DA reduced commission based on the broker's efforts.
Show answer & explanationAnswer & explanation
Correct answer: C. No commission.
In an exclusive agency agreement, the seller retains the right to sell the property themselves without owing a commission to the broker. The broker is only paid if they, or a cooperating broker, are the procuring cause of the sale.
Why the other options are wrong
- A. There is no standard rule for a 50% commission in this scenario; it's either full or none based on the agreement type.
- B. This would be true for an exclusive right-to-sell agreement, not exclusive agency.
- D. Commission structure is typically fixed by the agreement; efforts alone don't guarantee a prorated payment if the seller finds the buyer.
Exclusive Agency Agreement
A listing agreement where one broker is authorized to act as the exclusive agent, but the seller retains the right to sell the property themselves without paying a commission to the broker.
- Broker gets commission only if they find the buyer.
- Seller can sell independently without paying commission.
- Limits the broker's protection compared to exclusive right-to-sell.
Memory trick: OPEN EXCLUSIVE RIGHT TO SELL, EXCLUSIVE AGENCY.