Q: I’m a home seller with a question. The buyer of my condo has released a deposit because they have decided to back out of the deal.

My Realtor has filled out a Termination of Sales Contract Deposit Release and Directive with the broker getting half of the deposit and me getting half of the deposit. My lawyer says that I can negotiate an amount with my Realtor (to reimburse him for his time), but I am not obligated to pay him a penny.

I am mad that my Realtor stated that he would get half and that he would fill out the form in this manner when it goes against what is honest and ethical. I would like to stop working with him and to keep all of the money.

Is this wrong of me?

A: I talked to a real estate attorney who gave me a little background on real estate commission agreements.

Some commission agreements have the real estate broker earning the commission once they have found a ready, willing and able buyer. If that buyer decides to walk from the deal, the commission agreement would effectively give that broker the commission earned. Some commission agreements may have other terms in them, including one that says the Realtor will be paid out of the closing proceeds (in other words, at the closing only). You must look at the listing agreement you signed to determine whether the broker is entitled to a payment.

If you review your agreement with the Realtor and find out that the Realtor isn’t entitled to a payment, then the broker is out of luck, However, if the agreement gives the Realtor the right to the full commission, depending on the amount of the deposit, your Realtor may be taking less than he is entitled to.

However, I agree that it’s obnoxious for your broker to insist on getting half of the cash, if you don’t owe him a penny. He is taking advantage of your supposed ignorance as a seller. But you’re informed, not ignorant.

Finally, in these cases, if you have a good working relationship with your Realtor or real estate agent, and you determine he isn’t entitled to any money under the commission agreement, you may decide that he deserves something for his time.

I assume that you’re going to continue to try to sell the condo and the agent is going to represent it (or, he was going to but it sounds like you’ve now had second thoughts about using him due to the terms of the release of the money). If the agent was going to continue to represent the condo, and isn’t due any money under the terms of the contract, you would have to make sure he understands the terms under which you’re willing to move forward.

But agents do a lot of work, particularly in this market, and I don’t think it’s wrong to give him something for his time – particularly if you’re not going to use him again. While you may choose to use another agent to list the property, this agent could bring a future buyer to the door. So, you don’t want to burn a bridge if you can help it.

Those are the two sides to the coin. I think you should have a conversation with your agent to discuss his behavior and what your attorney said about not owing him a penny, but you better know the terms of your commission agreement before talking to him. Then, be quiet and listen to him explain why he presented it to you this way. What he says will be very telling about who he is as a person and what kind of relationship — if any — is possible in the future.

Most agents have never been through a downturn like the one we’re in. Some still believe home prices should rise forever. The truth is, right now, a lot of real estate agents are working pretty darned hard and not earning a penny.

If you don’t like how the agent responds to the conversation, your next move should be to call the managing broker of the firm. Set up an in-person meeting to discuss what you think is wrong with the picture. Then, ask for your money, and make a decision about what you want to do going forward. If this is the best firm to represent your condo, you may want to ask the managing broker for another referral.

Feb. 26, 2009