Do I owe buyer's agent if I back out of selling?

Q: I am selling my house without the use of a real estate agent. My current buyer came tome through his agent. Closing is still several weeks off. Due to a change of circumstance, it is a bad idea for me to move, and I want to cancel the contract. If I cancel, will I still owe a commission to the buyer’s agent? — Anonymous

A: Unless your contract has a contingency letting you cancel, this will likely come out of your pocket. There can be other consequences if you do this. Your first step will be to review your contract since all are different, and there are several versions of the standard forms commonly used in your area. The contents of your particular agreement will control the situation.

When you list your property with a real estate agent, you sign a contract known as a “listing agreement” where you agreed to pay your agent a commission for fifinding you a qualifified buyer. Your agent will advertise, or “list,” your property, promising to split that commission with another agent for delivering a buyer.

You did not use a listing agent but were approached by an agent working with your buyer. When you agreed to sell the property to your buyer, the contract stated you would directly compensate his agent. Even if your agreement did not address this issue, you would still owe the commission because it would be unfair to stiff the agent who brought you this qualifified buyer. We lawyers call this “quantum meruit,” and it allows someone to get paid for work done in good faith even if no contract exists.

Your other concern is that your buyer has invested time and money in purchasing your property. If you break the contract, he may sue you for his damages or for “specific performance,” wherehe asks the court to force you to sell him the house per the contract you signed. Your best bet is to take a reasonable approach and try to arrange a compromise. Your buyer, and his agent, wants to buy a house, not a lawsuit.