Definition
In real estate, the term “Ready, Willing, and Able” refers to a prospective buyer who meets three specific criteria:
- Ready: The buyer is prepared and intends to make a purchase.
- Willing: The buyer agrees to the terms and conditions set forth in the listing agreement.
- Able: The buyer has the financial means or resources necessary to complete the transaction.
When a real estate broker finds a buyer who meets all three criteria, they have met the contractual obligations of a listing agreement and are entitled to receive their commission, even if the sale does not ultimately close due to reasons not attributable to the broker.
Examples
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Example 1: A real estate broker has a listing agreement with a seller to sell their property for $500,000. The broker finds a buyer who agrees to purchase the property for the asking price and has been pre-approved for a mortgage of $500,000. This buyer is considered “ready, willing, and able.”
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Example 2: A broker lists a commercial property and finds an Investor ready to purchase and willing to accept the terms of the listing. The investor demonstrates the financial capacity by showing proof of funds in their bank account, making them “ready, willing, and able.”
Frequently Asked Questions
What happens if the buyer backs out of the deal?
If the buyer is initially determined to be “ready, willing, and able” but later backs out, the broker may still be entitled to their commission, depending on the terms of the listing agreement.
How is financial capability assessed?
Financial capability is often assessed through pre-approval letters from lenders, proof of funds, or other financial documentation that indicates the buyer can obtain the necessary financing.
Is the broker entitled to a commission if the seller backs out?
Yes, if the broker has found a “ready, willing, and able” buyer who meets the listing’s terms, they have fulfilled their obligation and are entitled to a commission, even if the sale is not finalized due to the seller’s actions.
What if the buyer and seller negotiate different terms?
If the buyer and seller negotiate terms that differ from the original listing, it depends on the specifics of those changes and whether the broker facilitates a new arrangement that both parties accept.
Does “ready, willing, and able” apply to renters?
The term is predominantly used in sales but can apply to rental agreements where a broker finds a tenant ready, willing, and able to meet the rental terms.
Listing Agreement
A contract between a property owner and a real estate broker authorizing the broker to find a buyer or tenant for the property.
Commission
A fee paid to a broker for their services, typically a percentage of the property’s sale price.
Pre-Approval
A lender’s assessment that a buyer qualifies for a mortgage loan based on financial information provided.
Contingency
A condition in a contract that must be met for the transaction to proceed to closing.
Online References
Suggested Books
- “The Real Estate Agent’s Guide to Real Estate” by John W. Reilly and Marie S. Spodek
- “Real Estate Brokerage: A Guide to Success” by John E. Cyr and Rebecca L. Tangeman
- “Your First Year in Real Estate” by Dirk Zeller
Fundamentals of Ready, Willing, and Able: Real Estate Transactions Basics Quiz
### In a real estate transaction, who typically ensures that a buyer is "ready, willing, and able"?
- [ ] The property owner
- [x] The real estate broker
- [ ] The lender
- [ ] The home inspector
> **Explanation:** The real estate broker is responsible for ensuring the buyer meets the criteria of being ready, willing, and able, as it is part of their role to facilitate the transaction and earn their commission.
### Who earns a commission when a ready, willing, and able buyer is found?
- [x] The real estate broker
- [ ] The property appraiser
- [ ] The lender
- [ ] The seller's attorney
> **Explanation:** The real estate broker earns a commission when they fulfill the requirements of the listing agreement by finding a buyer who is ready, willing, and able.
### If a "ready, willing, and able" buyer is found, but the sale does not close because of the seller, who is typically entitled to commission?
- [x] The real estate broker
- [ ] The seller
- [ ] The buyer
- [ ] The lender
> **Explanation:** The broker is entitled to the commission as they have met their contractual obligations by finding a suitable buyer.
### What typically proves a buyer is "financially able"?
- [ ] Personal reference
- [ ] Social security card
- [x] Pre-approval letter or proof of funds
- [ ] Employment history
> **Explanation:** Financial capability is generally proven through pre-approval letters from lenders or proof of funds.
### Can a listing agreement define specific criteria for a "ready, willing, and able" buyer?
- [x] Yes, it can outline specific criteria
- [ ] No, it is a subjective assessment
- [ ] Only the buyer can define this
- [ ] Only the lender can define this
> **Explanation:** A listing agreement can include specific criteria that define what constitutes a "ready, willing, and able" buyer under that contract.
### What is the result if a seller negotiates additional terms not in the original listing agreement?
- [ ] The broker automatically gets a higher commission
- [ ] The broker has to lower their commission
- [x] The broker may need to facilitate the new arrangement
- [ ] The sale must be stopped
> **Explanation:** If additional terms are negotiated, the broker may need to facilitate the new arrangement to achieve consensus and proceed with the transaction.
### What happens if a buyer backs out, and a broker had already identified them as "ready, willing, and able"?
- [x] The broker might still receive their commission
- [ ] The broker loses their right to commission
- [ ] The broker pays a penalty
- [ ] The transaction must continue regardless
> **Explanation:** Depending on the listing agreement, the broker might still be entitled to their commission even if the buyer backs out.
### Is a buyer who agrees to terms but lacks financial capability considered "ready, willing, and able"?
- [x] No, they must be financially capable
- [ ] Yes, as financial capability is unimportant
- [ ] Only their willingness matters
- [ ] Ready and able are not required simultaneously
> **Explanation:** Financial capability is essential for a buyer to be considered "ready, willing, and able."
### What kind of term could describe unexpected conditions that have to be fulfilled for a transaction to proceed?
- [ ] Mortgage
- [ ] Inspection
- [x] Contingency
- [ ] Escrow
> **Explanation:** A contingency is a condition in a contract that must be met for the transaction to proceed to closing.
### "Ready, willing, and able" is most often used in the context of which type of agreements?
- [ ] Employment agreements
- [x] Listing agreements in real estate
- [ ] Loan agreements
- [ ] Partnership agreements
> **Explanation:** The term is predominantly used in the context of listing agreements in real estate transactions.
Thank you for exploring the intricate details of “Ready, Willing, and Able” in real estate transactions. Continue enhancing your knowledge and excelling in real estate!
