Q: If you have a piece of property listed with a real estate agent, and you decide you don’t want to sell it before the listing period is up, do you have the right to cancel your listing and take it back off the market?
If so, what happens if you sell in a few months to a family member who never saw the property while it was listed? Can the agent come back and demand money or sue you?
A: The real issue here is what your listing agreement says about your right to withdraw a property from the marketplace.
You might have to review the document with a real estate attorney to determine if you have the right to cancel the agreement, and under what conditions. If the real estate agent has performed his or her end of the agreement, you generally would not be able to unilaterally terminate the agreement.
Most sellers never take a close look at the listing agreement the agent presents for signature before listing a property. That’s unfortunate, because the listing agreement sets up the terms and conditions for the listing, including how much commission the seller will pay, how long the listing will be, whether the seller can take the property off the market and how much, if anything, the seller will owe the broker if this occurs.
A new term added to some listing agreements over the past few years is how much you’ll pay for the listing company to process your sale when the contract comes in. These fees can run several hundred dollars on top of the commission you pay.
On some listing agreements, sellers agree to reimburse the agent for any out-of-pocket expenses incurred if the listing is withdrawn. On many listing agreements, sellers agree to pay a commission if the property is withdrawn, but sold within a specified period of time to someone who saw the property while it was listed.
Other agreements will require a homeowner to pay a commission if the property is sold within a certain period of time after the end of the listing agreement no matter who buys it unless the property is sold using another real estate company.
In many instances, if you withdraw the listing and someone who didn’t see the property while it was listed purchases it, the agent would be out of luck and not entitled to any commission. Again, it depends on how the terms of the listing agreement.
In general, if the seller cancels the listing to switch the property over to another agent, often there is no other fee or commission owed to the agent who originally listed the property. But this exception is spelled out in the agreement.
To understand what your rights are, you must go back to your listing agreement and figure out what it says. A real estate attorney can property help make this easier for you.
If it turns out that you may owe a commission to the agent, you and your attorney should figure out what you want to do. This may involve a call to the agent or the agent’s managing broker.
By the way, this is one great reason why it’s important to have an independent real estate attorney help you with your deal. You should find a real estate attorney before the process even begins, so that he or she can help you with all of the documentation in the purchase or sale of property, starting with the agency representation agreement and listing agreement.
One final thought: Given the current state of the real estate market you may find that your current real estate agent might be quite willing to terminate the listing agreement early. Not all real estate agents would agree, but some might want to focus their efforts with motivated and eager sellers and wait till later to work with a seller who might not be as eager to sell his or her home.
April 10, 2008.