Tag Archives: listing agreement

Selling Yourself When You Have A Broker

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Realtor.com quoted me in Selling Your House Privately If You Have a Listing Agent: OK or a Big N-O? It opens,

So your home is for sale, and you’ve signed a contract with a real estate agent, but you were actually able to nab a buyer through your own efforts. Maybe it was through word of mouth or your aggressive push on Facebook (you should really apologize to your friends for posting so many pictures of your house!), but someone is writing you an offer and really wants to buy your house. Having found a buyer on your own, are you still legally obligated to pay real estate fees or commission? Here’s how to know if you’re on the hook.

Read your listing agreement

In most states, a seller and an agent draw up something called a listing agreement. The listing agreement details the rights and responsibilities of the seller and the broker, and usually outlines the circumstances when a broker is due a commission.

“If it is an open listing or an exclusive agency listing, the seller can sell the property and not have to pay the broker a commission,” says David Reiss, professor of law at Brooklyn Law School
.

Things get tricky if the listing agreement confers an exclusive right to sell. This means the real estate agent has the sole right to sell the property. All offers must go through him or her, and for any sale, you’re obligated to pay the agent the commission spelled out in the contract, according to Marc D. Markel, a board-certified Texas attorney in residential and commercial real estate law. Agents rely on these exclusive listing agreements to avoid putting in what can be months of free work without seeing a payoff. For this reason, the agreement outlines the many ways an agent earns a commission, including what happens if the seller breaches the exclusive agreement.

The loopholes

If the sellers do find a buyer on their own, despite having a contract with an agent, they may be able to negotiate a reduced commission with the agent. But the sellers should be up-front about their potential to find their own buyer when drawing up the exclusive-right-to-sell listing agreement, says Markel. Maybe they know of a friend of a friend who is looking for a house, or they plan on marketing their home on social media.

If the sellers feel as if they are doing all the work, they might also be able to modify the existing agreement and add a termination if the broker doesn’t meet certain obligations, like selling the home within a certain time frame, says Sandy Straley, a real estate agent in Layton, UT. Other obligations for the listing could include organizing open houses, creating and distributing printed materials, and even the posting of videos shot by drones, says Markel.

Choosing a Real Estate Agent

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US News & World Report quoted me in 6 Tips for Choosing a Real Estate Agent. It opens,

Selling a home has become easier over the years with online services to help the seller set a price and advertise, but most homeowners still hire a real estate agent.

While many agents have deep experience and know their markets intimately, newcomers abound – people looking to cash in when the market is hot and may not even work at the job full time. So experts advise homeowners to look carefully for an agent with the right combination of experience, knowledge, work ethic and personality.

What is a Realtor? Typically an agent is someone licensed by the state to sell real estate, while a broker is a manager of a team of agents. A Realtor is a member of the National Association of Realtors, the industry’s main trade group, which requires members abide by certain ethical standards. Experts suggest sellers use agents who have received more than minimum training required in their state.

“In California, the requirements for a real estate salesperson’s license are very low, basically, three classes and a test,” says Bryan Zuetel, a real estate attorney and broker in Orange County, California.

“Almost any agent can get a listing, enter the property into the (multiple listing service), create some flyers, hold open houses and fill in blanks on the contract forms,” Zuetel says. “However, most agents do not understand, but should understand, the complex contract terms, implications of an unhappy party in the transaction, legal requirements for the numerous disclosures, appropriate negotiations during the escrow period, conflict resolution via mediation or arbitration, and the remedies under the contract.”

Do your homework. Law professor David Reiss, academic program director at The Center for Urban Business Entrepreneurship at Brooklyn Law School, says it’s important to check out a prospective agent with previous sellers.

“Some real estate agents are great at pitching themselves but not great at marketing homes once they have the listing,” Reiss says. “Getting recommendations from friends and relatives will give you information that the agent herself or himself would not provide. Do they return phone calls promptly? Are they creative problem solvers? Do they educate themselves about the pros and cons of the home and (comparable properties in the area)?”

Negotiating Real Estate Fees

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office-negotiationPolicyGenius quoted me in 5 Mortgage Loan Fees and Rates You Should Always Negotiate. It opens,

When it comes to making major purchases or financial decisions, we always hear that mantra, “Everything is negotiable.” You can haggle with the salesman when shopping for a new car, or with the hiring manager at a new job over your starting salary. It’s even possible to negotiate your tuition rates as a college student.

But a lot of the costs associated with buying a house can be difficult to negotiate down, according to mortgage advisor and author Casey Fleming.

“Appraisal, underwriter and processor are chosen by the lender, and the variation in fees is quite small,” he says. “Escrow and title services are typically chosen by the real estate agent of the seller in most areas, so the buyer has little say in what those fees will be.”

There’s also not much way around paying private mortgage insurance — you’ll need no less than a 20% down payment to avoid it.

But, you don’t need to let the non-negotiable items prevent you from bargaining for a better deal on other house-hunting costs. Here are a few fees and costs worth negotiating:

Real estate broker’s fees and commissions

From the outset, consider negotiating your real estate broker’s fees, according to Prof. David Reiss of the Brooklyn Law School, who teaches real estate finance and community development. “If 6% is standard in your community, you can look for brokers who will sell your home for 5% or less,” he says. “Be careful how low to go though, because you want your broker to be motivated enough to sell your property.”

Reiss notes that to gain the most advantage in negotiating their fees, your broker’s listing agreement should outline all the services they’ll provide you regarding advertisements, showing, and the plan in place to buy or sell the property in question.

Firing Your Real Estate Agent

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USA Today quoted me in How (And When) To Fire Your Real Estate Agent. It opens,

Breaking up is hard to do. Add a house and tens of thousands of dollars into the mix, and it can get downright ugly.

Unlike romantic entanglements, though, breaking up with your real estate agent as a seller if you’re not getting the service or the results promised doesn’t have to be dramatic. Here’s what you can do early on to minimize the damage — and how to handle the situation if, alas, you do come to irreconcilable differences.

When you first enlist an agent

Review your contract closely. Many real estate agents require their clients to sign an exclusive representation agreement, which is essentially an employment contract, says Brian Pendergraft, a real estate attorney in Greenbelt, Md. These contracts spell out how the client and real estate agent will each uphold their end of the deal, and they tend to be worded to protect the agent’s interests, says David Reiss, a law professor at Brooklyn Law School in Brooklyn, New York.

As a seller, you’ll want to ensure the contract covers your rights, too. This includes outlining exactly how your agent will market your home, and a plan to generate enough showings within a set timeframe so that you’ll have a legal leg to stand on for early termination, Reiss says.

Understand your options for termination from the get-go. There are a few ways to call it quits with your agent, but the win-win situation is a no-penalty termination in which neither party is penalized if the relationship ends prematurely, says Bruce Ailion, a Realtor and attorney in Atlanta. Include this detail in your contract.

If things go sour

Consider what constitutes a fireable offense. If you’re upset with your agent about sales strategy, lack of communication or poor service, those are issues that are unlikely to be resolved easily, Ailion says. Or perhaps you’re worried that your agent is in murky legal waters, such as refusing to show your home to people from certain protected groups or failing to share a property disclosure with buyers. Report these issues immediately to the agent’s broker of record, who is responsible for the real estate agents in a brokerage, Ailion says.

Put it in writing. If your agreement is in writing, you have to get out of it in writing even if there’s no specific expiration date, Pendergraft says. Write a letter or email to your agent requesting to part ways. If you get no response, hire an attorney to write a demand letter for you, Pendergraft says. This shows you mean business — at a fraction of the cost to take the issue to court.