Be wary of trade deals

An opinion by Mike Pinkney
Agents can really think Christmas has arrived early when a property purchaser offers to pay (or part pay) with another property and the agent can (quite rightly) charge a commission on the both sides of the trade.
However, there are now traps to this type of transaction that did not exist under the previous legislation.
Under our new 2008 Real Estate Agents Act, all of the provisions must be complied with for both properties, not just the original listing.
Failure to fully comply on the second property could result not only in no commission being collected on that property but a vendor could ask for the return of any commission collected, months or even years later. And (under some circumstances) there may be no defense depending on the “breach” - just hand over the money!
Previously an agent may not have been entitled to “claim” a commission but once collected there would need to have been extenuating circumstances for a vendor to get the commission returned. The current legislation however is more prescriptive and even states in Section 126 that there is no entitlement unless certain provisions have been complied with. We still do not know how tough the REAA might be in such cases.
In addition, even if no commission is collected, the agent would appear to carry all of the usual risks associated with a sale. For example, if the vendor of the original listed property subsequently alleges misrepresentation or lodges a complaint with the REAA about the (alleged) conduct of the agent.
Sadly, in these situations, every one may set out with honourable intent but, as I have said before many times, based on 40 years of personal and extensive third party experience, things go wrong. And when they go wrong, or even if they don’t but the client/customer sees an opportunity to benefit themselves, the agent is the one most at risk, irrespective of whether or not they have actually done anything wrong.
If you do not believe this, click here.
One client I have been working with was involved in advanced negotiations in such a trade and everything was fully explained and agreed. However, when the agent realised the implications of not complying on the second property he immediately started to put things right. Interestingly the purchasers (with the trade as part payment) were very reluctant to sign the appropriate documentation. 
Anyone who has been in this business for more than 24 hours knows that when that happens, the alarm bells are ringing, very loudly.
Just be very careful to dot all of the i’s and t’s.
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