How Long Does the Realtor Listing Agreement Last, and Are the Commissions Negotiable?
A realtor listing agreement is a written, binding legal document between you as the seller of your property and a real estate agent who will help handle the sale of your home and earn a commission from it once the sale is made.
The realtor earns their commission through marketing your home in a range of ways and handling a lot of the important paperwork involved.
It is up to you to decide how long you would like to list your home with that particular realtor. You can negotiate with the realtor in terms of duration and payment of commissions. For example, they may list it for you, but you might be the person who finds the buyer in the end - in which case, they would not get the commission.
The Average Duration
The average duration of most contracts is six months. If the house does not sell by then, you can list it with another realtor. The term should be no less than three months, because that gives the realtor the chance to get to know your property and market it effectively. They can build up momentum in order to make a good sale and thus earn a good commission.
The average commission on a home is 6% of the final closing price of the property. However, you might be able to go lower if the house is in good repair and in high demand due to its location and desirability as a property.
It is important to note that in some cases you might still have to pay commission even if the listing has already expired. If the person who eventually buys is someone that the realtor brought to the table, the clause will usually state that the commission is payable for up to 90 days after the contract has expired. This helps protect realtors from having all their hard work taken advantage of by unscrupulous sellers and buyers trying to cut them out of the deal and save money.
If you have been in discussions with other interested parties prior to the contract with the realtor, such as family members or neighbors who might want to buy your house, you can include the names of these people in order to show you are bringing in the sale and therefore there is no commission due to the realtor.
Early Cancellation of Contracts
Your contract with the realtor can be canceled early for a number of reasons. If you don’t feel the realtor is doing enough to market your property effectively, you are legally entitled to ask for an early cancellation. Be clear about the responsibilities and obligations of each party, and see if you can get them to be more proactive on your behalf. If they are not meeting the terms of the agreement, ask to cancel.
If they make a fuss, remind them that word-of-mouth referrals are important, and they certainly would not want to hold you to a contract when you are so unhappy with their services.