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Monday, July 6, 2009

Real Estate: Firing your agent is a serious matter

By BOB & DONNA McWILLIAMS, For The Capital

Published 07/05/09

When you sell your house with an agent, you'll enter into a written agreement with the agent and their brokerage firm to list your property for sale.

Depending on which company you select, these agreements may differ somewhat, but they all contain a lot of the same basic information. For example, the agreement will specify a term of the listing (many last for a period of six months); it will obviously contain the agreed-upon list price, and numerous other clauses will address the various other responsibilities of the broker, agent and seller. Not too long ago, listing agreements were only a page or two long. Today, they can be six pages or more. The additional detail is all directed toward making sure there is maximum clarity about who is going to do what.

One part of all these agreements is a paragraph that outlines the conditions and procedures for terminating the listing.

This brings us to the topic of our column - firing your agent. The process of selling a house can be a long and stress filled event. In this environment, even the best of client/agent relationships can be put to the test. Also, market conditions may change, causing a client to reconsider the whole concept of selling.

Regardless of the reason, terminating a listing agreement is a very serious matter and there are a number of things you should remember, before going down that road, including:

Does the agent deserve it? If you want to terminate the listing contract, because you've just decided you no longer want to sell, that's one thing. But, if you want to give the listing to another agent, that's an entirely different matter. As we have said in previous columns, agents get paid nothing unless a house goes to settlement. Agents pay out of their own pockets for virtually everything associated with putting a house on the market. So, if an agent loses a listing, not only are they obviously out the commission, they also realize a significant financial loss for things such as signs, showing services, brochures, Internet services, advertising and myriad other expenses associated with selling your house. Plus, an agent can quickly spend hundreds of hours of time establishing and servicing your listing. Add it all up, and an agent may have five or ten grand invested in your place in no time at all. Pull your listing, and it's all just money down the drain.

As a result, carefully examine the reason why you want to switch agents and make sure you have legitimate beef. Before you just haul off and give them the heave ho, call your agent and let them know what's bugging you. Chances are you may find out that your concerns are either ill founded or the agent was simply unaware of the existence or degree to which you had a problem.

In most cases, issues with an agent/client relationship can be traced to a lack of communication. Don't let an issue fester. Bring concerns up with your agent before they rise to the level where you want to terminate the agreement.

Finally, recognize that there are many things which are beyond your agent's control. Especially these days, market conditions are rapidly changing. Just because your agent said you could get $500,000 for your place, that could change - two months from now it might only be worth $450,000.

Being up-to-date with the competitive environment and how it might affect the sale of your house is an important duty for a listing agent. But, if the news is bad, don't shoot the messenger. It's not a perfect world and, from time to time, things are going to get messed up. We forgot who first said it, but we like the quote, "Excellence does not require perfection".

Know what it says in your listing agreement. If, for whatever reason, you've decided to terminate your listing agreement, make sure you understand the process for doing so. In most listing agreements, there will be a paragraph that says something like this: "Either Owner or Broker, by giving written notice, may cancel this Agreement so that it will terminate at midnight ( x ) days from the date of receipt of such written notice. Owner and Broker may also terminate this Agreement at any time by mutual written agreement." The number of days for that written notice is something you would have agreed to when you first signed the agreement. Many times, you'll see 30 days in there. But, once again, listing agreements can vary from company to company and agent to agent.

So, if you've decided you're going to call it a day with your agent and send in the written notice, please give them a call, talk it over one final time, and if the problem can't be resolved, let them know the letter will be forthcoming. It's not fair to the agent to just let a termination letter show up unannounced in their fax machine or e-mail. Remember, this thing works both ways. It's not unheard of to have agents fire their clients.

Understand the impact of terminating your listing. Even after you terminate a listing, this does not completely sever your relationship with the former agent. Most listing agreements will state that for six months (this time can vary) after you end the listing, you may still owe the agent a commission if you sell the house to someone who was made aware of the property during the time you had the property listed with that agent. This clause is usually in listing agreements to protect the agents from unscrupulous sellers who use an agent to attract a buyer, then try to dump their agent in an effort to avoid paying commissions.

Another misconception some sellers have is that changing agents will make their property appear as though it's new to the market. In this market, houses can be on the market for a long time and sellers worry that their property could become stale or stigmatized. But, unless you take your house completely off the market for at least 90 days, the counter that keeps track of how long you've been for sale will not reset to zero. Just changing agents won't help this. Besides, don't get too worried if your house has been on the market for a while. These days, seeing a house be around for 200 or 300 days isn't uncommon, and buyers don't see that as a red flag like they used to. In fact, some buyers may see a long time on the market as testament that a seller is ready to make a deal. In that way it can even be looked upon as a positive in generating an offer.

In conclusion, terminating a listing agreement is not something to be taken lightly. You have signed a contract with someone who is going to shell out considerable time and money on your behalf, all with absolutely no guarantee that there will be a pay day at the end of the road. Keep the communication going, and it will probably avoid the unpleasant process of parting ways.

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