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.
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.
READ THE FINE PRINT.
Agency begins when one person, in this case, the Realtor, represents the interests of the other person, the buyer or seller. The responsibilities of the agent are defined by your local Realtor Code of Ethics, state law and general principles of agency law.
Buyer representation involves entering into an agreement with a Realtor who represents the buyer, exclusively. Everything they do with regards to a transaction should be to their client's benefit and not the opposing party or the seller. Buyer agent duties and responsibilities include but are not limited to:
- Represent the buyer as appropriate and required by their local laws and code of ethics in the transaction
- Evaluate the buyer's needs on an ongoing basis
- Present the offer and negotiate on behalf of the buyer
- Work with the buyer to determine the amount of house they can afford and provide them with the appropriate resources
- Accompany clients on home viewings and open houses
Seller representation involves the seller entering into a contract with the Realtor to sell their home. Within this contract, between the seller and Realtor, the following information is detailed and specified:
- Home price
- Duration of agreement
- Rights & obligations
Cancellation of the Agreement
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 acknowledgement 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 acknowledgements 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.