We’ve yet to see this problem in Boston, that’s for sure. *
Basically, the issue comes down to this. In some of the hottest cities in the country, developers would pay part (or all?) of a broker’s commission, up-front, when a reservation form was signed. The project may not have been completed; hey, it might not have even broken ground. Still, the broker got paid.
All well and good.
Until, of course, things slowed down.
Now? Well, some of those projects were started but never completed.
Some were never even started.
And now, the developers (or their lenders?) want “their” money back.
From the wire:
A builder of luxury condominiums in Florida has sued real estate practitioners, seeking to force them to return the 3 percent commissions paid to them for selling 24 condos on which the deals never closed. In most cases, buyers walked away from their purchase contracts after the value of the condos fell.
Observers predict that this could be a trend …
… Ed Roberts, the owner of Beachfront Realty Inc., says the contracts don’t specify what would happen if the purchase fell apart … What’s more, Roberts says, much of the money went to individual broker-agents who left their companies long ago.
Um, yeah.
Source: Builder Sues for Return of Commissions – By Stephanie Chen, Wall Street Journal, by way of Realtor.org
* One of Boston’s high-profile developments is rumored to be paying brokers half their commissions, up-front, with the remainder paid at closing. That building, however, is already under construction, at least it’s first 4-5 stories, so it’s unlikely it will encounter this problem. However, what happens if a buyer is unable to close? Refund?
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SqFt Open House: Apr 21, 2025, 4:30 PM - 5:45 PM #73264187 | Condo © 2025 MLS Property Information Network, Inc. (MLSPIN). All rights reserved.
The property listing data and information, or the Images, set forth herein were provided to MLS Property Information Network, Inc. from third-party sources, including sellers, lessors, landlords, and public records, and were compiled by MLS Property Information Network, Inc. The property listing data and information, and the Images, are for the personal, noncommercial use of consumers having a good faith interest in purchasing, leasing, or renting listed properties of the type displayed to them and may not be used for any purpose other than to identify prospective properties which such consumers may have a good faith interest in purchasing, leasing or renting. MLS Property Information Network, Inc. and its subscribers disclaim any and all representations and warranties as to the accuracy of the property listing data and information, or as to the accuracy of any of the Images, set forth herein. MLS PIN data last updated at April 20, 2025, 6:27 PM ET
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The property listing data and information, or the Images, set forth herein were provided to MLS Property Information Network, Inc. from third-party sources, including sellers, lessors, landlords, and public records, and were compiled by MLS Property Information Network, Inc. The property listing data and information, and the Images, are for the personal, noncommercial use of consumers having a good faith interest in purchasing, leasing, or renting listed properties of the type displayed to them and may not be used for any purpose other than to identify prospective properties which such consumers may have a good faith interest in purchasing, leasing or renting. MLS Property Information Network, Inc. and its subscribers disclaim any and all representations and warranties as to the accuracy of the property listing data and information, or as to the accuracy of any of the Images, set forth herein.
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