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Double trouble?

You think real estate agent commissions are high? Imagine paying it twice!!

This is no joke and has caught out many unsuspecting home sellers over the years where they have had to pay the full commission to two agents for the same deal.

But how does this come about?

When you have an exclusive listing with an agent, they will introduce a number of prospective buyers to the property. If the property does not sell within the listing period, the vendor may elect to engage another agent to market the property thereafter.

A layperson might imagine that any obligation to the first agent has now passed. Not so… If one of the buyers introduced by the first agent later ends up buying the property through the second agent (unaware of the prior relationship), then the second agent is entitled to a full commission. However – the first agent is also entitled to a commission and has a valid claim against the vendor which they can pursue legally.

Interestingly, the same applies if you cancel the agency agreement and then sell the property privately. If the buyer was initially introduced by the outgoing agent, then they are entitled to a full commission.

So how do you avoid this?

The real estate industry understands the issue and has processes in place to make everyone aware. That said, sometimes the rules are not followed, and the homeowner is left with the liability.

So make sure to follow these steps…

  1. When a listing agreement expires, ask the outgoing agent in writing for a schedule of the parties they were working with and that showed interest in the property.
  2. Disclose this list to the incoming agent, and make sure they are aware of the prior agent’s involvement.
  3. Specifically raise the issue of ‘double commission’ and ask what protocols they have in place to protect you.

Note that the Real Estate Authority takes a dim view of agents not fully advising vendors of this risk – however it’s far better to avoid the issue altogether than try to point fingers afterwards.


Take care out there,

Scott Morison
Registered Valuer