What happens next whèn the seller refuses to pay commission to the real estate agent?

When a real estate agent helps a seller to sell their property, they are typically entitled to a commission for their services. This commission is usually a percentage of the sale price and is paid by the seller.

However, in some cases, the seller may refuse to pay the commission to the agent. In this blog, lets explore what can happen when a seller refuses to pay commission. You might be surprised at how far an agent can go to claim what's rightfully theirs.

Review the listing agreement.

The first step an agent should take is to review the listing agreement signed by both the seller and the agent. This agreement outlines the terms and conditions, including the commission the agent is entitled to, who is responsible for paying it, and the timeline for payment. It may also include provisions for handling any disputes that arise.

Communicate with the seller.

The next step is to communicate with the seller and try to understand why they are refusing to pay the commission. It is possible that there was a misunderstanding or miscommunication that can be resolved through discussion. If the seller has a valid reason for withholding payment, such as a dispute over the quality of the agent's services, then the agent may need to work with the seller to find a solution.

Consider legal action.

If the seller continues to refuse to pay the commission, the agent may need to consider legal action. The agent may need to hire a real estate lawyer to help them pursue legal action against the seller. This could involve filing a lawsuit against the seller for breach of contract or other legal causes of action.

File a complaint with AREA Uganda.

If the agent is a member of AREA Uganda (the Association of Real Estate Agents in Uganda), they may be able to file a complaint with the disciplinary committee against the seller. The committee can investigate the matter and may mediate a resolution between the parties, provide free advisory services on the best steps forward, or even offer legal assistance if there is a solid case against the seller.

In addition, the committee can leverage the association's influence within the industry to discipline or blacklist the seller if they are found to have violated any ethical standards. All those are in fact some of the reasons why all real estate agents in Uganda need to be members of their association.

Consult with the agent's brokerage.

The agent's brokerage may also be able to help resolve the dispute. The brokerage may have policies in place for dealing with commission disputes and may be able to provide guidance or support to the agent.

(It is unfortunate that many real estate agents in Uganda do not have listing agreements or instructions from the seller. Without these written agreements, it can be difficult for agents and sellers to establish a clear understanding of their respective rights and responsibilities.

This lack of clarity can lead to disputes over commission, misunderstandings about marketing efforts, and disagreements over the scope of the agent's services.

Real estate agents should work to educate their clients on the importance of written agreements and take steps to create these documents in order to protect their interests and ensure a smooth sale process.)

Reasons why a seller might refuse to pay commission.

There can be various reasons why a seller might refuse to pay commission to an agent. Here are some possible reasons:

Dispute over the quality of the agent's services: The seller may be dissatisfied with the agent's performance and feel that they did not provide the level of service that was promised. In this case, the seller may refuse to pay the commission until the issue is resolved.
Dispute over the terms of the listing agreement: The seller and the agent may have different interpretations of the terms and conditions outlined in the listing agreement. The seller may believe that they are not obligated to pay the commission under certain circumstances, while the agent may believe that they are entitled to payment.
Dispute over the commission amount: The seller may feel that the commission amount is too high or unfair, and may refuse to pay it as a result. The agent and the seller may need to negotiate a new commission amount that both parties can agree on.
The sale falls through: If the sale of the property falls through for any reason, the seller may feel that they should not have to pay the commission. However, the listing agreement may still require the seller to pay the commission if the agent has fulfilled their obligations under the agreement.
The seller finds a buyer on their own: If the seller finds a buyer for the property on their own, they may feel that they do not need to pay the commission to the agent. However, the listing agreement may still require the seller to pay the commission if the agent was involved in the sale in any way.

In any of these scenarios, it is important for both the seller and the agent to communicate clearly and try to resolve the dispute in a professional and respectful manner. If the dispute cannot be resolved through negotiation, the parties may need to seek legal or other remedies to enforce their rights.

My Final Thoughts.

When a seller refuses to give the agent their commission, the agent should review the listing agreement, communicate with the seller, consider legal action, file a complaint with the real estate association, and consult with their brokerage. It is important for agents to protect their rights and ensure that they are compensated for their services, but it is also important to approach the situation with professionalism and a willingness to work towards a resolution.