How to terminate a listing agreement
The glut of houses on the market plus foreclosures are driving down the price of homes nationwide. In some areas prices have hit the lowest point since the housing bubble burst. Despite the cute sign this house in Chagrin Falls, Ohio, has stiff odds for a sale. (May 23, 2011) Credit: AP
Q: I recently terminated a listing agreement with a real estate sales office. One week after terminating, they presented me with a contract from a buyer to buy my home. How long do I have to wait before I can do a for-sale-by-owner without having to pay a commission to that agency?
A: The answer depends on the listing agreement you signed. In most parts of the country, real estate brokers and sales people won't enter into a listing agreement if they know that they could bring a buyer to the table, only to have the seller cancel the listing agreement and then sell the home to the buyer anyway.
For this reason, brokers commonly insert a few clauses in their listing agreements to prevent sellers from backing out of their obligations. One clause stipulates that the seller can't unilaterally cancel a listing agreement, and that the listing agreement will be in place for six to 12 months.
A second clause generally says that when a real estate agent has brought a buyer who is willing and able to close on the home, the real estate agent has earned his or her commission at that time.
And the last clause related to this issue typically states that if the property is shown to any person while the listing agreement was in effect, and that person buys the property within six months to one year of the termination of the agreement, the listing broker will be owed a commission.
Review your listing agreement to determine what it says on this issue. If it says that you will owe a commission if you sell the property to a buyer who saw the property during the listing agreement, and that obligation lasts for six months, you will have to wait a full six months before you sign a contract to sell the property to that buyer if you want to avoid paying the commission.
One final note: Some real estate brokerage houses include a provision in their listing agreement that allows the home seller to move from one real estate brokerage house to another without having to pay a double commission.
In other words, if you terminate your listing agreement with one broker and then list your home with another, and a buyer that came when the home was listed with the first real estate agent then buys the home, the first real estate agent would not be owed a commission. You would only owe a real estate commission to the broker at the time you sell the property.
But you'd need to make sure that language is in your listing agreement, otherwise the first real estate agent could come knocking on your door demanding payment of his or her commission.
(Ilyce R. Glink's latest book is "Buy, Close, Move In!" If you have questions, you can call her radio show toll-free (800-972-8255) any Sunday, from 11a-1p EST. Contact Ilyce through her Web site, www.thinkglink.com.)
(c) 2011 ILYCE R. GLINK and Samuel J. Tamkin. distriBUTED BY TRIBUNE MEDIA SERVICES, INC.
