Flippers: A perfect example of my earlier point
Flippers: A Perfect Example Of My Earlier Point OfferPad Incentivizes Realtors On May 7th, I wrote a post to help Sellers understand the pitfalls, THE
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Once you’ve selected the Realtor to market and sell your home, you will first need to sign their Listing Agreement.
This Agreement is required by the respective MLS before the details and photos of your home are posted to the system.
The Agreement will outline some basic details, like the address of the property, legal description, personal items that are included or excluded from the sale and the term of the agreement; 30 days, 90 days, 6 months or a year, just some examples.
Additionally, and most important, is that the Agreement outlines the duties and responsibilities of both you the Seller and your Agent. So if you expect your agent to do something, but you don’t see that in the Listing Agreement, you may want to ask that it be included, in writing.
For the most part the Agreement is pretty simple and innocent in its language; as long as each party acts responsibly and performs as per the terms of the contract, all will be good.
But of course, this is the land of Attorney’s, so the Agreement also outlines how the parties will resolve a dispute.
There are a few items that demand your full attention and understanding. Its usually just a few items that cause the most disputes, dissatisfaction and even anger. I’ll discuss a few of those.
First a reminder that I am not an Attorney. I am offering my opinion based on 20+ years as a Realtor and the advice I’m offering is strictly; when I think you NEED an Attorney. Especially when your Agent is using the “Standard” or most often used Agreement in Florida: Exclusive Right of Sale Listing Agreement aka ERS-19tb.
However, there are some, very few, Brokerages who have authored their own or exclusive Listing Agreement. And others that require additional Terms & Conditions be added to the ERS-19tb.
In both scenarios, you NEED an Attorney. In either case, the exclusive agreement or the language added, will be authored to favor the Brokerage. NOT you the Seller.
For example, I recently had the opportunity to see the Exclusive Listing Agreement for the largest Independently Owned Brokerage in Florida, if not the Country. Their Agreement limits their liability or exposure, should they be found negligent or in breach of their Agreement, to just $250 and maybe the Commission you agreed to pay for their services.
The ERS-19tb, puts no limit on damages and allows for parties to sue or arbitrate any disputes.
I’m not telling you not to sign such an Agreement, with these terms, but I am telling you to consult with an Attorney before signing it.
And I’m also telling you to think about doing business with a Brokerage that wants to place such a restriction on your rights.
Remember, technology has leveled the playing field. Choose the Agent NOT the Brokerage. No one Brokerage has any data to support any claim that they are better than any other Brokerage.
For many reasons, from a simply decision to a change in circumstances, a Seller will to take their home off the market. In some cases a Seller realizes they chose the wrong Agent, and its time for a chance. Regardless of why, you need to understand your rights as outlined in the Listing Agreement.
If you read your listing agreement carefully, you’ll find a clause that outlines the terms under which you can “fire” your agent. This is where you really need to understand what you’re signing.
The ERS-19tb provides you the ability to Terminate and Withdraw the listing. But what does that mean? It most often means that your home will no longer be actively marketed on the MLS, and the public sites, but you will be bound to the other terms of the Agreement; as least until the contracted Expiration Date.
In other words, you won’t be able to hire another Realtor until the first Agreement ends.
Some Agreements include a Cancellation Fee. But you need to verify if paying such a fee gives you full release from the Agreement.
Once I became a Broker and opened my first office, I have never charged a Cancellation Fee and I’ve always given Full Release to my clients. My philosophy has always been that if I have failed my client, then I don’t want our last contact to be a dispute over a fee and a release. I want to simply apologize and see them achieve their goals. I may have lost their business but I didn’t lose their respect.
This will not require an Attorney, but should be understood as it relates to an early end to the agreement as I just discussed above.
Each Brokerage will have their policy and may mandate that their Associates must secure listings that are a minimum of X months long.
I can’t offer anything other than some advice based on my experience; don’t sign anything longer than 6 months and do NOT insult your agent with demands that the Agreement be less than 60 days. Unless you’re ready to price your home at the lower end of the market, its really not fair to the agent.
My other suggestion is to put your Agent to the test during the interview process. Ask them to present 3 recommended List Prices based on Selling Time.
I know from my experience as a BPO (Broker Price Opinion) Agent for Short Sales and Foreclosures, the Banks and Investors, always wanted a 30 day price and I believe a 3 or 6 month price.
Simply match the term of the listing agreeement with this information. In other words, if the agent is “promising” that your home will sell in 30 days if you list it at X, then there is really no need to sign a 6 or 12 month Agreement. Is there?
I’m not going to delve into this too much because anything I say may be irrelevant when the MLS implements the changes in August.
First, commission is 100% negotiable. It doesn’t matter if the Agreement has a pre-printed value, check boxes to select a value, or simply a blank, its NEGOTIABLE. And if the Agent refuses or says “my Broker doesn’t allow us to change it”, then go elsewhere. There are too many good and really good agents to choose from.
Having said that, remember, sometimes you get what you pay for. Choose the agent you’re most comfortable with and respect that he or she has to feed their family.
I should also quickly touch on an often misunderstood fact about this listing agreement.
There are 2 sections which display a commission value. The first, “Commission”, is the total commission you agree to pay your Agent. Lets say 6%. The second section, “Cooperating”, is the share of the 6% that your Agent will pay the Agent, if any, that brings the buyer to your home. Very often, Sellers misunderstand and add the values in both sections, thinking their paying, for example, 9% instead of 6% total, split evenly between your Agent and the Buyers Agent.
Tomorrow I’ll discuss the standard, most often used Purchase Contract in Florida and once the Agreements are published, based on the final settlement, I’ll write another Post about it.
If you have an Attorney that you trust and one who specializes in Real Estate, than I fully support having such an Attorney review the Listing Agreement before signing.
However, you can save yourself some money if you understand that unless your home is under contract for a sale, procured by Home Sell and Save, LLC. you are free to cancel at ANYTIME and WITHOUT ANY Penalties or fees due. And such requests will be processed within 24 hours; if not sooner.
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