One of the things I love most about writing my articles is I can share information and situations that come up with my clients and by sharing, hopefully help others avoid potential issues.
I had two different situations that came up with two of my sellers in the past couple of months. One was not able to get out of a listing agreement and the other was being asked to pay double commissions. Here is the situation for each seller.
Seller 1
The sellers reached out to me after having their home listed for two months with another Realtor. They were very unhappy with the service their current Realtor was providing and had been unsuccessful getting anything resolved, so they wanted to cancel their contract and list with another Realtor. They wanted me to list their home right away once they had cancelled with their current Realtor.
Their Realtor agreed to take the home off the market, however she refused to allow them out of the contract even though they had many genuine reasons for wanting to cancel. The term of this contract, and most Listing Contracts, was six months, so instead of cancelling their contract, the Realtor changed it from Active to Temporary Off Market, where it sat in a limbo state for the next four months, just waiting for the term of the contract to expire. It was not listed, not for sale, it didn’t show up on internet sites or in Multiple Listing Service (MLS) searches, but it also was not cancelled.
My clients could not list with me or do anything with their home until the contract had expired, so they lost four months of being on the market. The silver lining for my clients was that home prices had increased by the time I was able to list it and we sold it the first weekend for over list price.
I cannot even imagine making a client stay with me if they were not happy with my performance (luckily that has never happened) and force them to just ride the contract out, which is of no benefit to either the Realtor or the client.
How to Prevent This from Happening to You
No Realtor wants their client to cancel the contract. After all, we put a lot of time and money into listing a home, but if the Realtor is not providing the service they promised, the client should be able to cancel the contract. I always add in my listing contracts: this listing can be cancelled at any time for any reason prior to accepting a contract. While I have never had anyone cancel a listing with me, I always want them to have that option.
When you meet with your Realtor to sign the Listing Agreement, make sure it is written in the contract that you can cancel at any time.
Seller 2
I met with the seller that was referred to me, and he wanted to get the home ready to sell as soon as possible. I staged the home and started getting it ready for photographs. Before I had the pictures taken, and before it was listed on the MLS, I had sold the home. The seller was happy; he didn’t have to have a bunch of showings and I sold it for above the price he wanted.
About two weeks into the escrow, the seller mentioned that he had signed a Listing Agreement four months earlier with another Realtor who had just come to his door one day. He wasn’t ready to list his home at that time and she had told him not to worry, he could sign the Listing Contract as it wasn’t a binding contract, so he did.
He hadn’t heard anything from that Realtor in months and had forgotten all about it until just then. Since he was told that the contract was non-binding, he thought he could just call and cancel it. He called the agent and let her know he had sold the home, and she congratulated him on the sale.
The next day he received a call from the agent demanding her commission. The seller was still under contract with her, as the term of the contract was for six months, which is typical for a Listing Agreement, and the part about it being non-binding was not written in the contract. He was bound to the terms of this contract and paying her commission. Even though she was correct, he was legally bound to the six-month contract, and per the terms of the contract, she was entitled to the commission, I was shocked she was going to pursue this.
She had not done anything for the seller, had not staged the home or taken any photos, she had no time or expense involved, and had not listed the home. My client was beside himself and completely stressed over the thought of having to pay two commissions, which I never would have let happen. I was prepared to forgo my commission if it had come to that. He spoke to an attorney and luckily, due to a mistake the Realtor had made, he was not bound to the contract after all. But if it weren’t for that mistake, he would have been liable for paying two commissions.
How to Prevent This from Happening to You
If a Realtor tells you anything that is different from what is in the contract, make sure you get it in writing before you sign. If you have signed with a Realtor, make sure that contract is cancelled prior to signing with another Realtor. By having this listing can be cancelled at any time for any reason prior to accepting a contract written into the contract, you will protect yourself and be able to cancel at any time during the term of the contract.
Lorraine is a Multi-Million Dollar producing agent, has been a full-time Realtor for over 13 years, is an Associate Broker of KOR Properties, a Certified Negotiation Specialist, and is on the Professional Standards Board. You can reach Lorraine at (602) 571-6799.