How To Terminate a Listing Agreement

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 knew that they could bring a buyer to the table only to have the seller cancel the listing agreement and then proceed to sell the home to the buyer that the real estate agent found.

For this reason, brokers have a couple of clauses in their listing agreements to prevent sellers from backing out of their obligations. Once clause will say that the seller can’t unilaterally cancel a listing agreement and that the listing agreement will be in place for six to twelve months.

A second clause will generally say that when a real estate agent has brought a buyer that 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 will state that in case the property has been showed to any person during the time the listing agreement was in place and that person later buys the property within six months to one year of the termination of the listing agreement, the listing broker would be owed a commission.

You should review your listing agreement to determine what your agreement says on this issue. If your listing agreement says that you will owe a commission if you sell the property to a buyer that 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 with that buyer and then sell the property to that buyer.

One final note, some real estate brokerage houses include a provision in their listing agreement that allows you to move from real estate brokerage house to another without having to pay a double commission.

That would mean if you list your home for sale with another real estate agent and a buyer that come 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.


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