Real estate agency contracts are typically designed to lock you into a relationship with your broker and the agent. After all, your broker wants a commitment from you before she does a lot of work on your behalf based on your promise that you'll pay her when she does the job. However, between loopholes in the contract and business realities, there are ways to get out of your arrangement as long as your property is not already under contract.
Read Your Agreement
Read your agreement carefully, because there may be terms that allow you to cancel the contract without penalty. If your agreement is not an exclusive listing or an exclusive buyer's representative contract, you can probably cancel it without sanction. If it is exclusive, look for provisions that allow you to use any mistake by the agent to cancel the contract. Buyer's representation agreements are frequently easier to cancel without sanction than exclusive listings.
Setting The Stage
Most contracts contain a specific action that the agent has to perform to lock you in. For example, if you listed your house for $299,000 and the agent brings an offer for $298,500, you don't have to accept it. The same applies when a buyer requests you to do work on the property. If you agreed to do up to $2,000 of mold and pest remediation and the buyer requests $2,500 of work, you can walk away from the transaction.
With this in mind, if you're not getting acceptable offers, you can sit down with your agent and explain that you cannot afford to do anything other than what you and she agreed on in the contract. Let her know that would be willing to release her from her obligation to you. She may not want to waste time working with an unmotivated client and may take the opportunity to bow out gracefully.
Negotiating a Settlement
If your agent won't walk away from the listing or if your property could easily sell above list price, you may decide to try to negotiate a settlement with your agent. If you ask her what you need to do to get out of the contract, it's likely she'll offer for you to pay an amount significantly less than the commission you would have owed. Otherwise, to get her commission she knows she might have to sue you and then try to collect -- an expensive process that can take months, if not years.
Under Contract Properties
Unless you're walking away from a property that you were considering buying because you chose not to remove one of your contingencies, getting out of an agency agreement once the property is under contract can be extremely challenging. Your agent has done her job by either finding a property for you to buy or by finding a buyer for your property. At this point, of course your agent is much less likely to be willing to negotiate. If you're in this situation it's wise to get the counsel of an attorney to help you understand what your options might be.
- Bankrate: Firing the Agent Who's Selling Your Home
- New York Times: TALKING: Brokers; Breaking A Listing Agreement
- Minnesota Association of Realtors: Exclusive Right to Sell Listing Contract
- California Association of Realtors: Residential Listing Agreement - Exclusive
- Elika Associates: Exclusive Buyer Representation Agreement
- National Association of Realtors: Ask a Realtor - How Do I Get Out Of A Listing Contract?