XYZ Realty enters into an exclusive agency agreement with a couple for the sale of their home. The house is listed for $300,000 and the commission rate is 5%. The couple finds a buyer for a purchase price of $290,000 without the assistance of their agent. What is the amount of commission owed to XYZ Realty?

Rationale

$0

In an exclusive agency agreement, the agent earns a commission only if they are the procuring cause of the sale. Since the couple found a buyer independently, XYZ Realty is not entitled to any commission.

A ($0) CORRECT

This is the correct choice because the couple found a buyer without the agent's assistance. Under the terms of an exclusive agency agreement, the agent only receives a commission if they facilitate the sale.

B ($7,500) YOUR ANSWER

This choice incorrectly assumes that a commission is owed based on the listed price of $300,000 at a 5% commission rate without considering whether the agent was involved in the sale. The commission would only apply if the agent had procured the buyer.

C ($15,000) YOUR ANSWER

This option calculates a commission based on the full listing price of $300,000, which is not applicable here. The commission is not owed because the sale was conducted by the couple without the agent's involvement.

D ($14,500) YOUR ANSWER

This selection suggests a commission owed based on the purchase price of $290,000 at a 5% rate. However, since the agent did not facilitate the sale, no commission is due regardless of the sale price.

Conclusion

In this scenario, the couple's direct sale of their home means that XYZ Realty is not entitled to any commission, as outlined in the exclusive agency agreement. The lack of agent involvement in the sale results in the commission amount owed being $0, highlighting the importance of understanding agency agreements in real estate transactions.

$0

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