How to Avoid Being Handcuffed by a Real Estate Listing Agreement
When you’re ready to sell your home, you’ll eventually meet with a real estate agent who’s going to offer you a listing agreement. The listing agreement is a contract that legally binds you to sell with that particular agent for a specified amount of time. Most states offer a standard form that the agent and homeowner fill out together. Together you decide the start date and the end date of the agent’s services to you.
Sometimes throughout the home selling process, we hear, “I have a listing agreement with my realtor, but what can I do if I’m not happy with his efforts? Can I get out of it?”
Before you sign the listing contract, you should understand the terms of the agreement, since you’ll be held legally responsible for them. Get familiar with what will be expected from you as the homeowner so that you can recognize potential red flags.
What’s the Most Common Listing Agreement?
A 3-6 month listing agreement is common. Occasionally, however, some real estate agents try to convince a homeowner to agree to a 12 month listing agreement, or even longer. And why not? – He gets to place his “For Sale” sign (with his name on it) in your yard, and may or may not do anything to get the house sold quickly. Free advertising for him, and potentially nothing but wasted time for you.
Before you agree to any length of time for the contract, research the average number of days a house remains on the market in your area (frequently called DOM, days on market). If the answer is relatively short, say a month, then you know a year-long contract is the realtor’s way of trying to lock you into a lengthy listing agreement.
Exceptions with A Long Listing Agreement
In some cases, a longer listing agreement makes sense. Short sales, for example, frequently require year-long commitments, especially if the bank has a lot of short sales to process all at once. If the average DOM for your area is longer than 90 days, then perhaps a year-long contract makes sense.
How to Address the Agent
If you want a shorter listing agreement, make sure you make that request to the realtor before you sign the contract. If he has a problem with it, listen to his reasons carefully and do some research of your own to make sure his concerns are valid. If you find his reasons aren’t valid, and he still insists you sign a longer listing agreement, you should probably find a different realtor. Regardless what some realtors will tell you, the contract is always negotiable, and you shouldn’t be pressured into signing a contract that makes you uncomfortable.
Ask for an Easy Exit Listing Agreement
Your best option yet, request an Easy Exit Listing Agreement. An Easy Exit Listing Agreement allows the homeowner to back out of the agreement without penalty. Real estate agents who are confident in their ability to get the job done have no problem offering this type of contract. If you are unhappy with your realtor for any reason, an Easy Exit Listing Agreement offers no legal binding that can prevent you from walking away.
The advantages of an Easy Exit Listing Agreement are innumerable. They force the agent to do his job as efficiently as possible. All the pressure is placed on him, so he must do his best to get your house sold quickly. The willingness to offer an Easy Exit agreement is also an indicator of an agent who is going to do great work for you!
How to Prevent Being Locked Down in the First Place
Don’t let yourself agree to a contract that you may regret later. Start by interviewing at least three real estate agents, more if possible, before you officially hire one. During the interview process, ask if they offer an Easy Exit Listing Agreement. Keep looking until you find one who does.
Many well-qualified, experienced realtors are eager to handle the task of selling your home and bring you as much profit as possible. It’s just a matter of finding them. This simple prerequisite could save you from a big mistake.
It’s Never Too Late
What if you’ve already signed the contract, and are now regretting it? Some homeowners agonize over their choice of realtor, but don’t blame yourself. It’s easy to hire an agent based on their claims rather than on statistics or facts. If you’ve already signed the contract, but you now want out, read through the contract carefully and look for exit clauses. Some contracts include early termination fees, which range from $300-$500 (if you notice these fees before signing the contract, strike them out!).
If you can’t find any, simply talk to your realtor. If your relationship with the agent turned sour because of poor communication, maybe talking to them can salvage the agreement. Some agents want to keep the peace and will release the homeowner from the contract with no hesitation. They will simply remove your listing from Multiple Listing Service (MLS).
At AdvantageU – Home Seller’s Resource, we know how time-consuming it can be to interview multiple realtors to find those who are truly capable and experienced. We assess and pre-qualify realtors to ensure they provide home sellers with top quality service. They earn our AdvantageU Certified designation. If you’re looking for a realtor with a history of superior service, contact us and we’d be happy to help you Get Matched!