How Can You Get Out of a Realtor Contract?

[getdul981]

We have had our house listed with a realtor for just over a month. Prior to listing with this realtor, we had some neighbors come by and look at our house. We have only had one couple come by with a realtor from another company about 2 or 3 days after our initial listing. Our realtor had an open house this past Sunday and had 4 couples come by. Two were neighbor couples.

Today, the wife of the couple that came by prior to our listing came by again. She just called us and made us an offer that is very reasonable, but they don't want to have a realtor involved. It's approximately $5000 more than we would receive if we stay listed and sell for the full list price and the realtor gets her full 6%. It just so happens that her husband came by Sunday and the realtor knows that he is a neighbor.

Is it ethical and or possible to get the realtor to release us from the contract if we agree to pay her 1/6 of what she would have received had we stayed with her and sold at the full price? (we have a 6 month contract) If she won't release us, we are under no obligation to reduce the price or to accept any offers less than our list price. I would think she would jump at the opportunity to have a few thousand as opposed to nothing.

We are also afraid that the neighbors might find another house if we cannot sell to them.

Any suggestions???

[l2ridehd]

When you signed the listing agreement, there was information in there about canceling the contract and the obligation you have. If they have an "exclusive right to sell" for the 6 months, depending on your state laws, they may be able to hold you to it. I would read the contract, understand your obligation and then make a decision.

One approach would be to talk to your agent, tell them you have found a buyer, but that you will wait for the 6 months if required to sell to them. You may want to offer the agent a commission split. Give them just 3% (the same they get if sold by another agency) because you found the buyer and let them handle all the aspects of the sale. That way everyone wins. You get close to your asking price, the agent gets their commission, you sell now vs 6 months, and the agent handles everything with the sale. Costs you a little bit, neighbor gets the home for the price they offered, and you get to move on with your life. Handling a sale with a neighbor may seem easy, but there are many things that could still go wrong and this way your agent handles those issues.

[bkcunningham1]

Just be honest and talk to the listing realtor. You may be surprised with the answer. Communication is the key IMHO. They may be willing to negotiate something with you on the commission even if they aren't willing to break the contract.

The one sticking point may be that the prospective buyer came by during an open house hosted by your listing agent. Also, the prospective buyer may back out regardless of whether it is a FSBO or a sale through a real estate agent. Just something to think about. Don't burn bridges is my motto.

Is a listing agreement an "Exclusive Right of Sale?" It might be called something different in your area. Regardless of what it is called, this means legally you owe the broker regardless of who sells your house.

[BogeyBoy]

Laws regarding real estate transactions vary by state.

I would read the contract you signed with the real estate agent very carefully, perhaps consider having a real estate attorney review it for you. You wouldn't want to get into this type scenario: You cancel the contract. You sell the house to your neighbor. The realtor comes after you for the 6% commission stating the open house they held and conversation they had with your neighbor (as a professional realtor) is what persuaded your neighbor to buy the house. Unless you had a specific exclusion in the contract with your neighbors listed by name I think you might be paying the 6%.

[bandsdavis]

We have had our house listed with a realtor for just over a month. Prior to listing with this realtor, we had some neighbors come by and look at our house. We have only had one couple come by with a realtor from another company about 2 or 3 days after our initial listing. Our realtor had an open house this past Sunday and had 4 couples come by. Two were neighbor couples.

Today, the wife of the couple that came by prior to our listing came by again. She just called us and made us an offer that is very reasonable, but they don't want to have a realtor involved. It's approximately $5000 more than we would receive if we stay listed and sell for the full list price and the realtor gets her full 6%. It just so happens that her husband came by Sunday and the realtor knows that he is a neighbor.

Is it ethical and or possible to get the realtor to release us from the contract if we agree to pay her 1/6 of what she would have received had we stayed with her and sold at the full price? (we have a 6 month contract) If she won't release us, we are under no obligation to reduce the price or to accept any offers less than our list price. I would think she would jump at the opportunity to have a few thousand as opposed to nothing.

We are also afraid that the neighbors might find another house if we cannot sell to them.

Any suggestions???

Personally, I would be a little worried as to why the neighbors don't want a realtor involved. It adds nothing to their costs, since you as the seller are paying the commission, not them. I am not a realtor, but I have bought and sold 8 properties over the years in 3 different states. I have had good realtors involved who have made sure that the paperwork was done correctly, that all of my rights (as both a buyer and as a seller) were adhered to, and that nothing in the process was overlooked. I would be certainly hire a lawyer for the sale process if a realtor is not involved, and that could eat into your $5000 advantage fairly heavily, especially if things start to get a little dicey down the road. Even though they are your neighbors, a business deal is a business deal, and entering into one without professional help is probably a bad idea. I would want to have a much better understanding of their reasons for not wanting to do a deal through a realtor before I tried to break a contract. JMHO.

B.

[iandwk]

Personally, I would be a little worried as to why the neighbors don't want a realtor involved.

Ditto. That raised a red flag with me, also. Talk to your agent and explain the situation. As a former agent, I would try to negotiate something and let everybody be happy. Going to court after a commission makes the agency look bad, but most all will do it if pushed into it. In Georgia, we always had a clause in the contract that stated that after canceling or expiration of the contract, if the house sold within X amount of time, which we negotiated when listing the house, we would get the full commission.

[redwitch]

Don't know about the laws in your state, but if this sale occurred in California, you would be responsible for the full 6% commission regardless -- your neighbors dropped by during the open house and thus makes them a potential purchaser for the realtor.

So, here's another vote of being very honest with your agent. I would also be very leery about someone who wanted to cheat another out of a commission, especially since it is not a commission they would have to pay.

[bkcunningham1]

Please don't assume getdul981's friend understands how the world of real estate transactions works and is trying to be dishonest, cheat or do anything criminal. Maybe they suppose they are saving getdul981 money and they believe it is simply a matter of dropping the real estate agent with a phone call. The question was asked in the first place to have a better understanding of the process. I don't see anything sinister or underhanded in the neighbor's reaction. This forum is informational and that is why getdul981 asked.

[redwitch]

Whether the neighbor is doing it to save getdul some money or because there is an inherent distrust of realtors or some other, possible even innocent, reason, it still boils down to trying to cheat the realtor of her commission. The argument might be made that the neighbors were interested before the house went on the market, but they didn't move on it. So, I'd still be leery. It may take little to spook these neighbors once the process starts and leave everyone in the lurch.

[wendyquat]

I have my house in NC FSBO only because I have been in the RE business for 30 years and can aptly sell my home. I have made an offer to the RE agents in town that I will gladly pay them 3% if they will bring me an able buyer. There is REAL work involved from time of signing the contract til closing and I would be more than HAPPY to give that job to someone else!

Good luck!

[Pturner]

Given the signed contract and the neighbor's attendance at the open house, I would not exclude the agent from the deal unless the agent readily agreed to it-- regardless of whether I legally could cut the agent out.

I would explain the situation to the agent and see what I could negotiate.

Good luck and keep us posted.

[elevatorman]

Your goal should be to get the house sold. With the economy what it is a $5000 hit does not seem to be to bad. If you have to eat the agent commisssion, do it and move to TV. Or wait 6 months and maybe the market will be better or not.

[getdul981]

Thanks to everyone for your great input.

Elevatorman - I'm not sure you understood. If we can get out of the contract, we will be selling for $5000 MORE than we would if we were to stay with the realtor and have to pay the full 6%.

I don't understand how everyone is thinking the buyer pays the realtor. WE have to pay our realtor out of our proceeds. That's why I'm thinking we should offer her 1/6 of whatever she would get if we sell for the full list price. That could come out of the $5000, so we would not clear quite the $5000 like I had initially posted.

We're thinking we will contact the realtor tomorrow and explain the situation to her. We're also hoping that if we offer her more than the 1/6 she will handle the paperwork for us. After all, she didn't find these people.

[r_foye]

Nothing like honoring a contract...Whatever happened to integrity?

[The Great Fumar]

Whether a contract or handshake , Its your WORD... Your Word is your personal bond...........Its your character..:thumbup:
Some things are worth a lot more than money................

fumar

[golfnut]

As a previous poster said, in this market the goal is to sell the house, sell the house and negotiate the commission with the listing agent, which is usually half the total commission....gn

[getdul981]

Again, I want to thank everyone for your comments. I'm not sure I made myself clear. We are not trying to totally eliminate our realtor and are not going to do anything until we discuss this with her. The potential buyers DID come by before we listed with the realtor, but in all honesty, our house was not quite in the cleaned up and presentable condition that it is now. The potential purchaser used to be a realtor and could most likely handle all the paperwork herself.

It's quite possible that we'll have to give our realtor the 3%, and if that's what we have to do, then we will.

I guess I should have worded my subject line differently.

[kathyzapp]

getdul981,

Good luck with selling your house and moving to TV!

[graciegirl]

I am sure I don't understand. Is the 3% you mentioned the FULL commission for your realtor? Ours is 6% here in Cincy. We had a neighbors parents show interest in our house and asked the realtor for an exclusion in the contract listing them,(prior to our signing) and she refused.

We didn't list our home just because the evaluation of our house for any loan would be so low. I guess we will wait and see. We have a nice house here and a little but nice house there, so what more could you ask....except to live FULL time in The Villages.

Things are bad and not seeming to get better any time soon in the real estate market here. The banner headline on the front page of this morning's Cincinnati Enquirer was "One out of ten loans are behind in payments."

Not good at all!

[2BNTV]

Here in Connecticut, I signed a contract with a realtor for six months with a six month holdover clause. I was able to negotiate the holdover clause down to three months as six months is excessive. The holdover clause does not apply if I list with another realtor.

The holdover clause is to protect the realtor from someone waiting until the contract expires and selling without paying the realtor their commission.

IMHO - We are all looking downhill so the question becomes. Would it be better to sell and start living your dream or let money or other people stop you?

I wish you the best of luck in trying to renogiate your contract.

[getdul981]

Gracie - 3% is what the listing agent gets if someone else sells the house. If the listing agent sells the house they get the entire 6%.

2BNTV - I don't think our contract has a holdover clause. There is a blank space that could have been filled in to restrict sale after the contract expires, but it is blank. The contract doesn't expire until Jan. 2011.

We are to meet with the prospective buyers tomorrow and see what we can work out. Then we will call the realtor and see if she will work with us.

[golfnut]

hopefully u sold your house by now. FYI we added language to our sales contract that said we could opt out of the contract at any time with 7 days written notice. the agent had no problem with that, he said hey if you are not happy with my services then I'm not doing my job and you can void the contract, this was a remax office....gn