Phil recently obtained a listing on a $20,000,000.00 property, and he's seeing a lot of action on it from well known real estate developers.

The problem that Phil is experiencing is from one particular prospect, who says they're ready to pay $4,000,000.00 higher than anyone else for the property. But they have no track record in real estate development, and they refuse to submit any financial information on themselves. But they say they'll submit financial information after they've reached a signed agreement to purchase the property from the owner.

The owner, unfortunately for Phil, is someone who is not very sophisticated in real estate matters himself. He acquired the property through inheritance, and really has no track record in real estate matters. But he's enamored with the idea of getting $4,000,000.00 more for his property from these people with no track record and no financial information. In short, he doesn't realize that he has a much stronger possibility of ending up with zero dollars and a lot of wasted time if he decides to move forward with these people. Phil believes these people just want to tie the property up for a while with a lot of contingencies and try to flip the property for a profit to another buyer. But of course if they can't find the other buyer at a higher price, they'll never close on the original purchase of the property with Phil's owner.

Phil needs a clause in his listing agreement that automatically extends the listing when it's taken off the market during a sale, and then is placed back on the market after the sale falls through.

As an agent, when you're in the period between having the purchase agreement signed, and closing the actual transaction, the time left on your listing agreement is constantly ticking away. So if the property is off the market because of the pending sale for 30-90 days or more during this time, your listing agreement may actually have expired before the transaction closes. At the minimum, you'll have lost valuable time from your listing agreement that you'll definitely wish you had back. So you'll want to make sure you include a clause in your listing agreements to have this time restored once again if and when your listings become available again and back on the market.

And there's no better example of a clause like this than the one included in the commercial property listing form published by the AIR Commercial Real Estate Association. To find the form visit airea.com.

Once you're on the page, scroll down to the form that's named, "Standard Owner-Agency Agreement for Sale or Lease of Real Property 97." And when you've located that form, click on the link to it and scroll down to Paragraph 4 entitled "Extension of Term."

If you're not already utilizing this form for your commercial real estate listings you should seriously consider doing so. And look at the other forms also offered on the page through the link above as they represent the most detailed, continually updated forms I know of for commercial real estate transactions. And at the same time, you might want to check with AIR to make sure that the forms have been approved to be utilized for doing business in your area. You can contact AIR directly at (213) 687-8777.

You'll deal with buyers who don't close their transactions, but you can still protect yourself as a listing agent at the same time, too. Make sure you utilize a listing form that extends your listings for any time the property is off the market when you're dealing with a buyer who doesn't close, and you'll feel much better knowing that you still have time left on your listing.

Published: July 4, 2005

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Jim Gillespie, Ph.D., is America's Premier Real Estate Coach℠. He has over 20 years of experience in real estate sales and is a past president of three different real estate companies. His FREE real estate E-newsletter with tips and creative ideas to help agents make more money is now read by over 35,000 agents nationwide. You can subscribe to his FREE E-newsletter by visiting RealEstateSalesCoach.com or contact him at Jim@RealEstateSalesCoach.com.