Gita Bantwal inspired this post, by her quest for answers about what to do with a listing where the seller wishes to exclude a buyer. I had once had this experience. I listed a farm where the owner, prior to me, had this property listed with another broker. The property consisted of 160 acres and a farmhouse. The prior broker was able to sell the farmhouse with part of the land, approximately 50 acres. Try as the other broker did, the balance of the land did not sell before the expiration of their listing. For whatever reason, the seller didn't want to continue with the former broker and did what many sellers sometimes do, found another broker. It had been approximately 5 months since the first listing expired. This seller wanted his past purchaser to be named in my new listing agreement as an exception. The seller explained in great detail that he has a recorded first right of refusal on the remaining land and he did not want to pay me a commission if this buyer buys.
I found this all sort of amusing and I was able to explain back in great detail that he not only was an exception, he was actually a double exception! Since the last listing only expired 5 months ago, his name would be a protected name for 7 more months with the past broker. Since he had given this buyer a first right of refusal, I could also not sell to another party without a release being signed that could be recorded to fully terminate this prior buyer's rights. What the seller was offering was a listing agreement that had very little potential for any income at all. I explained that he would have to guarantee my fee no matter who purchased the property if I was to take this listing. Furthermore, if his prior buyer with the first right buys within the next 7 months under my listing agreement this seller would sadly have to pay a double commission!
There was a happy ending... the seller understood, he sign the listing, and the property sold to a buyer I found. The prior buyer signed off of the first rights, I got paid and the seller rode off into the sunset happily paying only a single commission.
Wow - I needed a flow chart to follow that one! (Just teasing - great post!) I'm surprised that your protection clause is 12 months - is that right? I believe ours here is much, much shorter. Glad things worked out for you in the end. I've often heard of sellers wanting to exclude certain buyers from a listing agreement - usually FSBO's who just KNOW that the person who came to their open house will buy it the second it goes on the market with a Realtor. What some of us do is exclude those buyers for 7 or 10 days only - if they don't buy during that time, they're not going to. Most sellers are okay with that.
Have a great week!
Hi Jenn, In Wisconsin the period is 12 months for named exclusions and I agree, it is best to keep it short as to the time period, in this case I did not agree to exclude the name. Turned out it worked for both of us.
Thanks Kay for the comment, I too have had no first rights holders buy during my time as a Realtor. But, I was not about to let it slip through and learn a lesson.