What are your rights with regards to Realtor representation agreements? Did you sign a buyer representation agreement? A seller representation agreement? If so, or if you’re considering it, this article is for you.
When we started the process of buying our home last year we went were forced to fire one and quickly find another. But before doing so we were faced with the issue of terminating the first agreement and making sure there were no continuing obligations with the broker as most agreements are really signed with the brokerage and not the Realtors themselves.
Realtor representation agreements are legally binding agreements which inform the buyer and agent of their rights and responsibilities to each other while engaged in a contract for services. This is known as agency The buyer grants the Realtor agency and the Realtor provides a service within the bounds of the agreement. However, every agreement doesn’t always end in a happy purchase or sale of a home. Sellers and Buyers may choose to terminate agreements for a myriad of reasons. Whatever the reasons, make sure that you read the fine print before signing the dotted line.
Let’s reiterate: READ THE FINE PRINT.
How To Cancel Your Realtor Agreement
This should typically be done in writing, not over the phone and not via email. If you do cancel your agreement via email, please be sure that you get confirmation and acknowledgment via email (or snail mail) of the Realtor’s response and plans to terminate your contract moving forward. In some cases, your agreement is with the broker of the company your Realtor works for and you will need to make sure that the broker has agreed to cancel the agreement at your request. You will need to obtain proof of this as well.
We live in a litigious society and you need to make sure you have concrete proof of said cancellation, receipt confirmation and acknowledgments by broker and Realtor that they will release you from the agreement and discussion of any potentials penalties for cancellation.
Read the fine print before signing any agreement as this is typically not done until something happens and the buyer or seller need to cancel the agreement. Does your agreement permit you to cancel within a certain time frame with no penalty? What about Realtor compensation upon cancellation?
Legally a Realtor cannot continue to represent you once you have terminated agency; however this does not prevent them from holding you to penalties per the contract you signed.
This may include:
- Compensation fee
- Commission for the sale of the home said Realtor accompanied you on a showing or open house or a home said Realtor presented to you
Recourse Upon Difficulty Exiting The Contract
- Contact the broker
- Most brokers are more than happy to discuss the situation with you and offer you another Realtor within the company or simply terminate the contract. After all, bad news spreads like wildfire and they would rather have your business or release you from the contract without issue
- Local Real Estate Board for clarification and/or complaint
- If your broker (for whatever reason) refuses to release you from the contract then your next recourse may be to discuss the situation with your local real estate board for clarification on your rights and/or to make a complaint.
- Real Estate Attorney
- When all else fails, consult with a real estate attorney
Contracts can be tricky, again read the fine print and understand each point within the contract as buying and/or selling a home is a large and important transaction. You’ll want to make sure it goes as smooth as possible.