A Gold Coast real estate agency who recruited the buyer for a Benowa mansion has been denied commission for a sale that went ahead 3 months after its exclusive agency had ended.
Jesse Willcox and Mitch Lambert signed up owners Mark & Tiana Pullen on a mandate that they would not entertain any offers for their luxury residence south of $1.8m.
Despite a first-class campaign pitching the home at between $1.9m and $2m, the top offer from the April 2016 auction was disappointing, at just $1.5m.
While they still had an open listing, the pair successfully created an immediate and genuine interest from prospect Cindy Zhu – the ultimate buyer – who they conducted on several inspections through the property.
In counselling the owners “to move down to meet the market” when presenting Zhu’s first offer of $1.65m, they were met with a reprimand.
“We will not go below $1.8 million,” said the Pullens dismissively. “Really. No.”
Move they did though, ever so slightly to $1.795m, a price they described as their “rock bottom”. Zhu came up to $1.71m but beyond those figures, neither party would budge.
At Tiana’s request, the property was removed as a Lambert & Wilcox listing on realestate.com in mid-July.
Shortly thereafter the sellers granted a 6-week exclusive to a new sales team who expressed their excitement to Lambert & Wilcox at the prospect of working with them and their buyer to move her up in price.
Cindy however found her own way to Scott Euler on the new team via the realestate.com listing. She inspected again and submitted a further offer through Scott at $1.728m.
A contract was finalized at the end of October when the seller accepted via agent Euler, Zhu’s final offer – at $1.752888m.
Lambert & Wilcox waited for the sale to successfully settle before filing a Magistrates Court claim for commission oby reason of having been the “effective cause of the sale” because they had introduced Zhu to the property.
That argument found favour with the Magistrate who ordered the Pullens pay them full commission on the resulting sale price which was of course additional to the commission they were required in any event to pay Euler.
They appealed, asserting that the contract with Zhu was brought about in different circumstances and that the chain of causation from the earlier introduction had long since been broken.
The re-hearing came before Judge Susan Muir in the Southport District Court.
That the original agents continued to have an open listing was a “distraction”according to her honour. The only issue to be decided was whether or not the original agents were the “effective cause of sale”.
She closely examined the further steps Euler had taken that had led to the deal.
“What the Magistrate’s findings failed to take into account in my view, is that the sellers refused to reduce their asking price until such time as they were able to obtain three further offers from Ms Zhu,” she observed.
The judge’s 18 page decision contains a good account of Euler’s salesmanship.
He had firstly made Ms Zhu understand that if she wanted to get the home she would need to offer at least $1.75m.
“I just felt that I was having some success in slowly walking Cindy up,” Euler explained from the witness box. “I thought I could hopefully continue to move her northward”.
His breakthrough had come in mid-October when Cindy made a further offer on paper at $1.75m to which the owners countered at $1.78m.
“At that that point I managed to walk down the owners with their high expectations,” Euler then recalled. “Back to countering at $1.758 million… and so that’s where I was trying to get Cindy to move”.
it was when the parties were just $8,000 apart that he managed to convince Zhu to come up by another $2k.
“Cindy, you need to continue to work with us. We can get you there. We need to go a little bit more,” Euler said in explaining his technique.
And when she was ready to come up a further $2k, he chimed in again “Well, look, let’s go the $2k and throw $888 in there just for good measure”.
Judge Muir was impressed by that account and agreed it was Euler’s “skill set” that was responsible for eliciting the successful final offer and closing the deal.
“When an agent is employed to sell a property, or to find a buyer, he does not earn his commission simply by finding someone who is ready, willing and able to buy, or who offers to buy,” reasoned Her Honour.
The appeal court reversed the Magistrate’s ruling and exonerated the Pullens from liability to pay any commission to the original real estate office.