Pay $500 if Cancelling Listing Agreement ?

bluestarrgalleryFebruary 7, 2012

We've lived in several states California and Arkansas, and I have never heard of a clause whereby the listing agreement states the seller must pay $500 to cancel the contract. We listed our home here in Florida last year and the first agency deleted the clause at our request, they were terrible and we wanted to cancel in the first month but were reluctant to because we thought they'd sue us.

Now we have approached another listing agent and they may also have that same clause and are trying to tell me it protects the company from the sellers canceling and selling to someone they know. But isn't that potential already covered in the contract about selling within so many months of the house being listed?

Legally I think a contract is a contract and if either party breaches the contract it is null and void; they just want us to pay for their advertising up front I guess, what do you think of this clause in the listing agreement?

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cas66ragtop

You say the agent you approached MAY have this clause. Well, you don't know if they do or not, so whats the big deal? If they DO have the clause, simply tell them you won't allow it. I certainly would not agree to such a clause. Every realtor I have talked to around here, the average contract life is 6 months, some will do 3 months. If I am not happy with the agent, I just wait until it expires and then I find a new one.

    Bookmark   February 7, 2012 at 7:44PM
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mpinto

I am a Realtor in Massachusetts. I've never heard of such a thing. you are right, that is already covered in the contract. Also, I doubt they could collect on this anyway. It would cost them more to pursue it than $500. Don't sign one of these. Are these small agencies or national ones?

    Bookmark   February 7, 2012 at 8:10PM
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bluestarrgallery

Thanks mpinot and cass66ragtop,

The previous agency had this clause in their contract but took it out at our request, that one was Remax, the next agency is ERA and we are reviewing the contract at this moment (just got a copy a couple of minutes ago) but there are several other items in the contract that don't look favorable to the seller either.

With the previous agency it was a long seven months to wait when they made no attempt to market our home or return phone calls, or upload photos, nor any showings for two months, but after the stmt about the $500 we thought they would sue us so we were reluctant to cancel the contract.

Now we have cold feet, but waiting six months to sell is a drain on our psyche, we want to travel before we get too old to do so and we are in our 60s, when you get to our age you realize time is limited as is the potential for failing health.

After I read this contract that I just got a copy of I will post the items I have questions about.

What is the average commission I always thought it was 6% and they have 7% - this is a residential home.

I'm beginning to wish I never bought a home in Florida because real estate law seems to be so much different than California - more in favor of the real estate company, broker and realtor than the seller - seems the scales are tipped way over to their side in the contract verbage.

    Bookmark   February 8, 2012 at 12:03PM
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cas66ragtop

Typical commission in my area is 6%. I had assumed this was the typical commission everywhere. With the market as bad as it is, and sellers losing so much money, a lot of realtors are now doing 5%.

I just sold my house in December, and I paid 5%, plus I gave the buyer's agent a bonus of $1,000. This saved me some money, and I was told this was also more attractive to the buyer's agent. They were allowed to keep the whole bonus, where the commission gets divied up amongst the realtor, her broker, her assistant, etc.

    Bookmark   February 8, 2012 at 1:26PM
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bluestarrgallery

Hi Cas55ragtop, thanks, I think the previous agency Remax was 6%, yes sellers are loosing equity left and right. We bought at a reasonable price two years ago, but still in all we did a lot of fixing up, sweat equity, and improvements out of our pocket never dreaming the market would continue to decline like it has, who would have expected it to last this long, DH is looking over the rest of the contract now, best to read the contract with a fine tooth comb which we are doing now. We liked her but if that's what her agency/broker/company is like well that may be another story.

    Bookmark   February 8, 2012 at 3:15PM
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maddielee

I'm in Florida...that commission % can be negotiated. The norm (that I know of) is still 6%. 7% might be helpful in this market. half a percentage rate to the buyer's and seller's agents might motivate them, but most agents are motivated to make a sale right now.

    Bookmark   February 8, 2012 at 6:52PM
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terriks

By law the commission is always negotiable. However, the agent can choose to pass on your listing if the commission is not worth while to him/her.

    Bookmark   February 8, 2012 at 7:30PM
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linda117117

Maybe this is regional. This is not that unusual in my area. It became popular a few years back when alot of people were putting their homes on the market to "test" the market and then changing their minds to sell when they couldnt get as much as they thought for their homes. It protects the agent from wasting their time and money trying to sell a house where the sellers dont really want to sell. IF that is the only thing stopping you from listing with that agent, talk to them, chances are they will remove it from the contract.

    Bookmark   February 9, 2012 at 4:30PM
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