In a perfect world, people selling their homes would have magical experiences with their listing agents. Everything would go smoothly from start to finish. However, this is not a perfect world. There are times when sellers and listing agents just cannot make it work. There are times when sellers have to consider canceling their listing contracts.
The problem with canceling is that it is not always easy. In some cases, sellers cannot cancel listing contracts without paying hefty penalties. That is why it pays to carefully look over a listing contract before signing on the dotted line.
Contracts Are Legally Binding
Real estate brokers and agents may refer to listing agreements rather than contracts. Perhaps this is to avoid language that might cause sellers undue anxiety. At any rate, the agents at CityHome Collective say that listing agreements are legally binding contracts between the parties that sign them.
One of the first things to know is the term of a proposed contract. Terms may be dictated by state law in some cases. Typical term options are 30, 60, 90, and 180 days. If you sign a listing agreement with a 30-day term, you are granting the agent the exclusive right to list your property and represent your interests for 30 days.
Listing agreements contain many more details. They often discuss commissions and any other fees an agent might assess. They may include language explaining how the listing agent plans to market the house. Essentially, a listing agreement can contain whatever language agents and clients agree to.
Reasons for Canceling an Agreement
Sellers tend to think that any reason is a valid reason for canceling a listing contract. The law doesn’t see it that way. So in the interests of both seller and agent, agreements tend to contain language explaining what conditions constitute a justifiable reason for canceling.
CityHome Collective says the most two commentaries for cancellation are:
1. Dissatisfaction with the Agent
Agents represent themselves as being able to provide certain services. If the seller believes those services have not been provided to his satisfaction, he may have a reasonable claim for cancellation. The seller can definitely cancel if the services are not provided at all.
In light of this, it is important for sellers to insist that their listing contracts detail exactly what services they can expect. Contracts should also contain a clause giving the seller the opportunity to cancel, without charge, if promised services are not rendered.
2. Seller Change of Heart
There are times when a seller has a change of heart. The seller might determine that now is not the right time to sell. There can be a variety of mitigating circumstances – like health problems or a change of employment, for example. Note that having a change of heart doesn’t necessarily mean the listing agent will agree to cancellation.
A reputable agency with a long history is more likely to let the seller out of the agreement without any penalty. However, there is one exception: an excessive amount of investment by the listing agent. In other words, the agent may have already spent a considerable amount of time and money marketing the property. She might insist that the seller reimburse her for her expenses in exchange for canceling the agreement.
Whether you are buying a luxury home in Salt Lake City or a condo in Chicago, listing agreements are legally binding contracts. Canceling one can be a tricky proposition unless the contract’s provisions have been clearly and provably violated. Know what you’re getting into before you sign any agreement with a listing agent.