Sellers: Dump your real-estate agent efficiently
They say that breaking up is hard to do. Here's how to make it easier.
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Between listing and sale, some home sellers find that the relationship with their real-estate agent sours. As much as they'd like to, homeowners can't just walk away from an agent with whom they no longer want to work. They usually must negotiate their way out.
Here are tips that sellers can use for dismissing their agent.
Talk it over
Typically, relationships between agents and their clients turn south because of poor communication, says Jennifer A. Chiongbian, a broker with Rutenberg Realty in New York City. The problem of unresponsive agents "plagues our industry," says Chiongbian, who estimates that 70% of dissatisfied sellers blame their agents for a "lack of communication." (Bing: What should you ask potential agents?)
When listing a house for sale, a homeowner does two things. First, the seller enters a legal agreement with the broker or the broker's real-estate firm. Second, the seller starts a business relationship with the broker. The distinction is important, says Joe Adkins, owner of The Realty Factor, a real-estate brokerage in Altamonte Springs, Fla.
"Most agents know when the seller doesn't like them or doesn't want to deal with them any longer as their real-estate agent," Adkins says. "So if the seller asked nicely and explained the reasons why they want to cancel the listing contract, most real-estate agents would honor their request. I know I have in the past."
Talking it over can salvage the relationship.
"Good agents, companies and brokers will discuss solutions based on market data to resolve the client's queries," says Jerry Grodesky, a broker and owner of Farm and Lake Houses Real Estate in Buckley, Ill. Solutions can include more marketing, price reductions, open houses or early termination.
It's a good idea to cancel the agreement in writing to avoid any misunderstandings when, and if, the seller eventually finds a buyer.
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Breaching the contract
Chiongbian says asserting a breach of contract usually isn't the best way for a homeowner to end the relationship. That kind of dispute can quickly escalate into a lawsuit if the seller sells the house and refuses to pay commission to the fired broker, she says.
You can make the case for a breach "if the agent is not doing their job sufficiently," Chiongbian says. "But breach does not mean being able to move a listing in a reasonable amount of time because the property is so overpriced. Breach is more likely if the agent hasn't met simple service requirements such as responsiveness, taking photos of the property, showing the home, executing the proposed marketing plan or honoring their fiduciary responsibility to the homeowner."
Even if agents haven't held up their end of the bargain, proving a breach of contract will create more drama than most homeowners want, most agents say.
The listing agreement might call for early termination fees. The fees can range from $295 to about $495, says Pete Adams, owner of Benefactor Realty in St. Petersburg, Fla.
- On our blog, 'Listed': It's a good time to buy, but is it a good time to sell?
Not all brokerage firms use termination fees, but the practice is common around the country, says Adams, who advises homeowners to strike out the fee before they sign the listing agreement.
Consider the agent's costs
"Keep in mind that the agent may have spent considerable money upfront to market the listing," says Sam DeBord, managing broker at Wiegand & DeBord in Seattle. "In that case, there may be more hesitance to allow a seller to cancel a listing in a short amount of time without finding some way for the agent to recoup their costs."
Photos, labor and a few advertisements can easily cost $1,000 or more right off the bat, DeBord says. If the broker can't sell the home by the end of the contractual period, then most brokers "understand that those costs are unrecoverable." But if the seller tries to terminate the agreement soon after listing, many brokers are likely to feel duped, DeBord says.
Some brokers might accept a seller's offer to pay their costs in exchange for terminating the contract early, DeBord says. But brokers want the full opportunity afforded by the length of the deal to make a sale, he says.
Let the contract lapse, but be careful
Usually, it takes a while for a seller to become dissatisfied with the agent, and if the contract is almost over anyway, it probably makes a lot of sense to just let it lapse. But homeowners who plan to turn around and sell the house themselves after the contract ends should be careful, says Lee Wilber, an agent at Hilton Realtors in Springfield, Mo.
"Most agreements used throughout the country will offer a protection period for the agent" for up to six months, Wilber says.
If the owner sells the property without an agent during that period, and the buyer learned of the property while the listing agreement was in effect, the seller might be required to pay the broker a commission.
THERE ARE GOOD REALTORS AND BAD REALTORS JUST LIKE GOOD AND BAD BUILDERS. I GUESS I AM WONDERING WHICH CATEGORY YOU FALL IN. IF YOU RESPECTED EACH OTHER YOU WOULD HAVE A BETTER RELATIONSHIP!
My attitude as an agent is to say "the relationship is mine to lose". and even if I spell out penalties in the contract for a quicker termination, I usually let them go. I mean, why would I want to continue with them, if it is not a good relationship?
However, if I find another listing agent working behind the scenes to wrestle away the contract, then after a good conversation with the clients, allowing me to discover the hidden motivation, then I might get a little harder to allow them to go without penalty.
I'd like to know where Gilroy McAdams is getting his information from? Is his opinion based on fact or is it just his misunderstanding of how professional Realtors work? First of all Mr. McAdams, how do you earn your living? Are you a carpenter, painter, mechanic, doctor, lawyer, retail manager, sales person? What is your profession and how do you get paid?
Of course Realtors make money on the sale of property because that is how they get paid for the work that they do. Sometimes that work is saving Buyers money or sometimes it is making Sellers more money on the sale of their home. Our fee is usually negotiated up front. Tell me Mr. McAdams do you know of any other professional that requires huge expenditures in education, licensing and the everyday cost of running a business where that person get paid on a promissory note?
Do you pay your doctor after he completes successful open heart surgery and your recuperate in 6 months? Do you pay your mechanic after he fixes the brakes on your car and you ride on them for 6 months? NO, you don't. Realtors don't earn an hourly wage so we rely on the fact that we get paid from a transaction based upon our performance and a pre-negotiated fee. Do you go to work and donate your time to your employer? Realtors spend huge dollars marketing their Seller's listings, paying for ongoing education, paying for Realtor dues and almost everything else that aids us in our business.
Of course we work for money and we make money from a transaction! I suggest that you reevaluate your ignorant stance and statements of greed. You make Realtors look bad and you drive the image of Realtors being used car salesman. I stand behind my profession and I am proud to be a professional Realtor that is held by law to uphold ethics and the law itself. You couldn't walk a mile in my shoes and survive. I would be happy never to work with anybody the likes of you sir.
Greg, I could not agree with you more. From 99 - 05 I watched so many homes come through with the same Realtor. Florida ( just one of the states our company was in ) watched 100's of houses. 1. transaction $275 k, $40k in upgrades and back on the market for $375. Then from $375 $50k in say a lap pool and enclosure, back on the market for $525k. this over 4 or 5 years. Same Realtor with 7% on each transaction. That's $82,250 bucks over 4 years on JUST ONE HOUSE the Realtors made. ,,,,,by the way that house was foreclosed on in 2007 and Sold in 2008 for $245,000. Yep those Real Estate Agents sure did not have anything to do with the bubble.
They claim supply and demand. It's a scam. Find a couple buyers out there to over pay for a few properties in the area and next thing you know you have appraisals using those properties to inflate an area. For every higher sale Even more for the appraiser to work from. The average Bank needs 3 to 5 comp houses for a sale. How easy to inflate an area. The Banks count on the appraisal to show value, the appraisers survive on the realtors and loan brokers to find value and 80% of them are all in bed together. And the Real Estate industry as a whole learned nothing from this in the past 5 years.
Realtors are scum. They are used car salesmen but with houses. They make money on transactions. The better the transaction for them the more they will steer you in that direction.
prepare to pay more for a house than you should because of "there is another offer" there are ALWAYS other offers because its a game they play to make sure you eek out every last cent.
When you sell, they want a fair price to start but if they aren't making money elsewhere prepare to be told your house needs to drop $5,000 a week until its sold to some vulture (or friend of the Realtor who will then resell it in 6 months!)
Remember, brokers make money on transactions. Your profit and loss isn't an issue, same with Realtors. Do not trust them but make their greed work for you, never offer more than 90% with closing for a regular sale, and 80% with closing for a foreclosure. Wait until after 60 days and the inflated dream price of a house will crash to reality. Then put in an offer on the reduced/real price.
As far as Realtors taking responsibility for the housing crash our jobs are to help clients buy and sell their home. We are not in the lending profession and do not want to be that is why we send them to a lender and or they already have there own before they come to us. It is the buyers decision to get a loan and what type of loan. We have nothing to do with that.
Wow, this is certainly enlightening. As a professional Realtor, who has worked hard to earn 6 professional designations over the last 10 years, it never ceases to amaze me the ignorance of the general public when it comes to "taking charge" of their single most important asset. I've actually been keeping track of the "for sale by owners" in my neighborhood - you know, the ones who know more than anyone about the "market". They are the ones who don't read the paper, refuse to attend open houses in their own neighborhood to study the competition so they can educate themselves about REAL market value, and assign a "selling price" to their house. I have seen know it alls who see professional, skilled and hardworking Realtors as "blood suckers" leave THOUSANDS of dollars on the closing table because they refused to hire competent representation. It's laughable, actually, since most intelligent and well informed homeowners understand the value in hiring a professional to sell their home for an average of 18% more than they'll get from a low balling FSBO buyer. Simple math really.....and you SAVED how much, Mr. Fsbo?
Just because I may know how to pull teeth doesn't mean I should do it for myself!