The chores of listing and selling a home should not be taken lightly, nor handed off — especially in this market.
Typically, when you contract a real estate broker to help sell your home, you are promising to pay for services rendered if the broker finds a person ready, willing and able to buy your home.
The first thing to remember is that nobody can read your mind. Make sure your agent knows your concerns and keep all communication lines open.
In two recent cases, expectations were not expressed, mainly because the sellers — an executive at a financial services company and a retired couple — were constantly on the road.
The couple chose to continue touring the country in their RV and asked one of their children to be the point person with the real estate agent for their waterfront getaway. The executive, in a similar fashion, turned over tasks related to selling her downtown condo to her office secretary.
Both sellers returned home and were unhappy with the way their homes were being marketed. The couple felt that ads describing their home were poorly written, for-sale signs were not properly placed and that the agent was not doing enough to get other agents to preview the home.
The executive expected her downtown condo to be better exposed to the in-city business community. She said she felt there were more aggressive, creative agents in the industry than the one she hired.
What both parties did not do was work directly with the agent, leaving assumed requirements and expectations to fall between the cracks. Frustrated and upset, each seller wanted out.
Could they rescind the listing agreement without the broker’s consent? When a seller elects to cancel, is the broker entitled to a commission?
- The seller can usually cancel the listing agreement at any time, whether or not the seller has legal grounds to do so. A listing agreement typically creates what is known as an "agency agreement" with the broker, and it can be canceled by the principal (seller). It’s always best to cancel in writing.
- If the seller cancels the agreement without having legal grounds, the broker could be entitled to payment. Legal grounds for cancellation include broker malpractice, violation of the broker/agent fiduciary duty, or breach of contract by the broker. If the broker is not at fault, the broker could be entitled to "damages" even if the house does not sell during the unexpired term of the listing.
Damages could mean advertising costs and other out-of-pocket expenses in servicing the listing. If the house sells during the unexpired term of the cancelled listing, the law presumes that the terminated broker would have made the sale, thus entitling the broker to a commission. However, if the seller can prove the broker would not have made the sale, the seller can avoid payment of the commission.
Most of the time, a seller can cancel a listing with one agency and move it to another broker in the same multiple listing service (MLS) and be liable for only one commission.
For example, if you cancel your listing with Billy’s Real Estate and move it to Nancy’s Real Estate, and both are members of the same MLS, you usually are relieved of your obligations to Billy by paying Nancy a commission when the house is sold.
Despite what you may hear, all commissions are negotiable. Some agents are very open to negotiating or deferring the amount of the commission, while others are insulted at the thought of bargaining. Also, some agents work for a flat fee or other payment structure, or even work under contracts that allow the seller to independently bring in a buyer without necessitating a commission payment to the broker.
When you sign a listing agreement, you are actually agreeing to work with the agency and its boss, or broker. Many agents also hold the "broker" designation, which means they have undertaken additional classroom instruction and testing.
Be realistic when you sign a listing. Discuss all services, explain your expectations and don’t expect miracles. Interview a few agents even though you might already be dead-set on one to represent you. Check references and then choose the one you think will do the best job.
And plan on staying involved after the initial agent interview. Your secretary may be worth a million bucks inside the office, but you should be the point person on all sales matters regarding your home.