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Does it ever make sense to try to hang onto a listing when the seller wants out?

By
Real Estate Agent with RLAH@Properties AB95346

Today, Karen Fiddler wrote a great post about what some sellers in her community had to do to get out of a listing agreement.  And this probably happens more often than we like to think about.

In this case, the previous listing agent had done something clearly bad and wrong, but his broker backed him up.  The seller was angry and wanted out of the listing agreement prior to the expiration date, and the broker clung to the agreement for dear life, refusing to sign a release until the local Board got involved, and I had to ask: does it ever make sense to try to hold sellers to an agreement when they want out?  

There are usually more than one of several factors that cause sellers to want out of a listing or buyer agency agreement:

  • The agent has been unsuccessful at finding a buyer.
  • The agent is not doing what he said he would do to market the home.
  • The home isn't getting showings.
  • The listing agreement was for an unusually long period of time - longer than the sellers want to wait to make a change.
  • The agent has made some mistake in their handling of the listing, and the sellers don't like the way the clean up operation got handled.
  • The agent has been generally incompetent or unethical, and the sellers want to start over.

You get the drift.  

But whatever the seller is thinking, you are thinking that you've been working your heart out to get their ugly, smelly house sold and they don't appreciate you.  They ignore your advice, then whine because the buyers are not lined up around the block, checkbooks in hand.  

They say they want out.

You point out that they signed a contract that is legally binding.

I do know companies that will hang onto a listing even if it means heading to court (where the client virtually always wins).  But even if the broker is right and is able to hang onto the listing, what's it going to cost them really?

And make no mistake.  Being right will cost you.  

  • You've angered a client, and instead of focusing on how to make things work for him, you've put your energies into defending whatever you did.  And that won't fix a client's problem.  
  • You could become the subject of scary real estate stories at every cocktail or dinner party you client attends for a long, long time, which could lose you listings in the future.  
  • If you are trying to force a seller to stay with a contract until it expires, that's exactly what it is very likely to do.  That  client will so not want to pay you a dime that they are likely to be completely uncooperative, no matter what you.
  • You are likely to damage your reputation with colleagues who may be involved in some way with the transaction.

But being wrong and hanging on?  That will really cost you!

  • This is where lawyers get involved, and that is never a good thing for your career.
  • If you have violated the NAR Code of Ethics, you could be in the soup with your local real estate board and the state commission.  If you're lucky, you'll just pay a fine.  But you could also get your license suspended or even revoked.
  • If you get hauled into court, there could be serious damages.
  • If you get hauled into court, some areas have boiler-plate contracts that, in the event of litigation, the loser has to pay the winner's legal fees - in addition to his own!  Oh, and don't forget the court costs.

The agent in Karen's post was clearly in the wrong.  So was his broker in supporting unethical behavior. But even if the seller was in the wrong, I'd let him go.  

The time spent in grievance committee investigations, regulatory hearings, and perhaps even a courtroom take time and expend lots of psychic energy.  Even if any decisions do go in your favor, you could have made more money if you had let the listing go and spent time working with clients who were a good fit and who liked you - the ones who will refer lots of business to you in the future!  So even as a business decision, letting go can be a smart move.  

 

Comments (155)

Rob Hurst
KenCom Real Estate - Bulverde, TX
Real Estate Broker, Kendall & Comal Counties

Good post! And good discussion..

My standard reply during a listing presentation about duration is

"You may cancel at any time because if you don't want to work with me then I don't want to work with you"

 

Oct 23, 2015 04:36 AM
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

If they want out then what's the point in keeping it alive? Even if you got a full price cash offer they can refuse to play ball.

Oct 23, 2015 04:41 AM
Valerie Crowell
Keller Williams - Walnut Creek, CA
Broker Associate

True.  Being right gets you no where.  In California we have a safety clause.  Joe Blow and his lovely wife saw the property due to my efforts.  If they write an offer, I get paid.  With lots more words because we're California.

Oct 23, 2015 04:56 AM
Theresa Akin
CORPUS CHRISTI REALTY GROUP - Corpus Christi, TX

It boils down to each situation/listing is different. I had a crap listing and did my best to sell. No calls or showings. It was one of those you could drive past and look through and see all you needed to but none the less. Anyway called to renew the listing. He sold it! Even while under contract. It was my first listing (a referral) but still. Called my broker at that time and I knew what I wanted to do and turned out she agreed. Went to the listing and got our sign out of the yard. Never looked back.  Had anothe listing and we let it go. It was listed with 3 different agents prior too. She was hard to reach all the time. Took it off the market. She called and wanted to know what she should do or if I could help her make her nephew pay her what he owed because he was renting to own and she got one payment in a year. Advised she get an attorney.

Oct 23, 2015 05:48 AM
Derrick Guevremont
Counselor Realty of Rochester - Rochester, MN
Rochester MN Homes for Sale

I agree with letting them go if nothing can be worked out to make the sellers happy.  Hopefully we have a list of potential buyers that we have shown the listing to in case they are trying to sell it out from under us!

Oct 23, 2015 06:43 AM
Hannah Williams
HomeStarr Realty - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-820-3376

Patricia Kennedy  well you have really created a subject that has caught every-ones attention .  I say it depends if you can not work it out let it go  with conditions as Derrick Guevremont  has stated ..Too bad

Oct 23, 2015 10:08 AM
Don Taber
RE/MAX Complete - Wilson - Wilson, NC
REALTOR / BROKER / CRS / GRI

It is not worth trying to hold on to a listing if the seller is unhappy.  If they will be honest and will tell you what the real problem is and allow you to right it, if in fact you are not doing what needs to be done, that is great and you have won the listing at that point.  But if they won't or if they are unrealistic, just let it go.  It will always be a problem for you if you try to hold on. You may lose even if you win.

Oct 23, 2015 01:08 PM
Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale

I never want to be involved in a relationship where another party wants to go a different way.

Oct 24, 2015 04:30 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

I've had a few situations where the seller wanted out of a listing. Twice the seller was willing to pay me a "said amount" for my efforts and we parted ways.  All the other times I just let them go. It's not worth a unhappy seller telling all their neighbors and friends anything negative. Smile and let go!

Oct 24, 2015 05:02 AM
Patricia Kennedy
RLAH@Properties - Washington, DC
Home in the Capital

Wow!  And thank you for all of your comments!

There is at least as much wisdom in these comments as you'll find anywhere in any of the how to real estate books.  

 

Oct 24, 2015 11:19 AM
Susan Emo
Sotheby's International Realty Canada - Brokerage - Kingston, ON
Kingston and the 1000 Islands Area

What if another agent, who has shown your listing, contacts the Seller and tells them if they cancel your listing, they'll bring the buyer for a lower %.   Do you still allow them to cancel?

Oct 24, 2015 12:13 PM
Gilbert Real Estate Experts: Colby & Michele Myers
Flat Fee Etc. Real Estate - Gilbert, AZ

Great post, we would let them out.  Knock on wood, but we have never had to let one go before, but we would let them out.  Thanks for posting.

Oct 25, 2015 03:44 AM
Amy Gutschow
RE/MAX - Sheboygan, WI
Professional Real Estate

sometimes things just don't work.  Move on or even refer another agent who may be a better fit

Oct 25, 2015 06:07 AM
Ricki Eichler McCallum
CastNet Realty - Corpus Christi, TX
Broker,GRI,ABR, e-Pro, TAHS

It's hard but I would ask for reimbursement of my expenses and then let them go.

Oct 25, 2015 08:11 AM
Dennis Erickson
Berkshire Hathaway Home Services Montana Properties - Bozeman, MT
My Best..., Always!

Georgie #137, true you can't force a person to sell, but you can force them to pay a commission.  When a seller has a legitimate reason for wanting out of the listing, let them out.  When they are trying to circumvent their agreement with you you need to stand up for your business, not just yours but every agent who will be affected by your actions.  If we won't fight for our own money, why reduce our agreements to writing?  Remember, what you do individually has an effect on the rest of us.  Protect your profession.

Oct 26, 2015 02:11 AM
Marnie Matarese
DWELL REAL ESTATE - Sarasota, FL
Showing you the best of Sarasota!

My partner and I actually have no penalty at all for early withdrawal of a listing.  If a seller does not want to work with us then we certainly do not want to work with them.  In the ten years we have been in business, we only ended one listing early and that was because the couple reconciled after considering divorce.  Our small firm does not have any problem with our policy and feels the same way we do.  

Oct 27, 2015 11:32 AM
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Patricia. I agree with you completely. The stress of this kind of thing is never worth it. I had a repeat client who lost it and wouldn't let me go unless I agreed to outrageous things which were impossible and would have violated privacy laws. It was the most difficult time in my career. Just thinking about it makes me sad.

Nov 05, 2015 09:56 PM
Sandy Padula & Norm Padula, JD, GRI
HomeSmart Realty West & Florida Realty Investments - , CA
Presence, Persistence & Perseverance

Patricia Kennedy We are fortunate that only one client ever wanted out of a listing agreement and that was due to a change of life's circumstances. We know he will only re-list with us if something else changes. To release a seller from a listing agreement is good business and never should be prevented. We write ALL out listings with no cancellation penalty and our client appreciate that fact.

Jan 02, 2016 10:20 PM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

A few years ago my son had his duplex listed with an agent who refused to return his calls or answer his emails over a period of 3 months. He asked to be released from the listing and the agent said NO, it was against company policy. 

Since he had only 2 months left to go on the listing, he didn't pursue it, but that agent and agency surely did get a lot of negative advertising.

My son warned all of his friends about them - and I warned mine. 

I never see their signs around our small town any more - so I'm assuming we weren't the only ones who had bad experiences with them. 

Mar 01, 2016 02:18 PM
Anonymous
Dennis Erickson

There are circumstances such as agent neglect, divorce reconciliation, health issues, regular human issues that come up unexpectedly where cancelling a listing is not only the humane thing to do, it's just good business practice. HOWEVER, there are times when the seller is approached by a friend with a real estate license who will work for a lower commission, or when a buyer approaches a seller directly with an offer etc. etc. when it's reasonable to at least recoup some losses. This can be done by agreeing to a referral fee if the property is relisted with another agent within 6 months or by agreeing to a full commission is the property sells within a period of time. To just walk away at any seller's whim begs the question, "Why sign a listing agreement at all?" if it only allows you to spend money and the seller to walk away at any time? Take an open listing if that's how you feel about it. Remember, any step to protect your own business practice also protects other Realtors' business practices. Be fair, but don't be a sissy either.

Mar 02, 2016 02:52 AM
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