If you are new to the real estate market and ready to sell your home sweet home, the most important document that you sign with the real estate agent is the listing contract. It basically says that the seller is making an agreement with the agent to pay his or her percentage of commission when they find a buyer. But what if your circumstances changes and you are compelled to cancel the contract after signing it? Are you allowed to cancel the contract in the first place? The answer is, certainly yes. A listing contract is merely to assure that you would pay the commission when the agent brings a buyer for the house. Nothing in the agreement will force you to go through with the payment. And reality, things are a little different. For example, if you think the real estate agent is not doing the job as expected, you can fire him. Maybe the agent is not good with handling customers and you ended up with missing antiques from the storage locker, ruined carpets or portable garages being vandalized due to the agent’s absence during an open house. Or maybe you simply decided to hire another brokerage firm because it was cost-effective. Whatever the reason, you have every right to cancel the signed contract.
Generally, a listing contract comes with a withdrawal clause – the terms under which a seller can cancel the agreement. This clause will allow the cancellation but under bonafide change of situations. Yes, all the above described fictional incidents can be considered a reason. But the most common reasons tend to be the following:
- An unexpected job change situation
- Seller deciding not to sell the property
- Financial loss
- Sudden illnesses that require long-term care or rehabilitation
The withdrawal clause usually comes with a condition that the seller agrees to not to sell the house within the next six months of the cancellation. It can also be an unconditional clause where the seller is free to choose other agents or pursue other options. However, the listing agent must sign to whatever the agreement says before the cancellation becomes effective. Most real estate agents agree with this arrangement likely because they have no choice. Others have the seller pay a withdrawal fee for the time and money they spent on showing the property. This fee could run anywhere from $1000 to $1500 depending on many factors.
Again, note that the listing contract is not the same as the contract that sellers sign with the buyers. The sales contract has nothing to do with the listing contract. In other words, when the seller signs a sales contract with the buyer after the buyer meets contingencies, the house must be sold no matter what the circumstances of the seller are. The seller should proceed with the sale and not back out for unacceptable reasons. Changing mind only leads to a messy legal and financial problem for the seller.