Can seller terminates the listing agreement before it starts?

4 Replies

I have a friend (seller) who needs some advice from you guys:

Situation: Seller (in TX) signed listing agreement with an agent two months ago (in SEP) to sell his property once the tenant family moves out by end of NOV (still a month away as of today) based on the current lease. The Tenant recently shows interest to purchase and has worked with her agent referred lender for a promising loan. The buyer reached out to the seller directly to ask to lower the sales price. Seller agrees but with a condition - 50% off original commission. This means seller will need to terminate his side agent and he and the buyer both use the buyer's agent for the transaction. Note that seller's agent has not been in touch to follow up with him for over a month since the listing agreement was signed. He is not happy with this.

Questions:

1) On the listing agreement, it says the MLS listing will start after tenant moves out and the photos of the property have been taken. Since the house is not on market yet and therefore nothing has been done by the seller's agent at this point, can the seller terminate the listing agreement with his agent?

2) If the answer to 1) is Yes, can you advice the seller what's the proper way to do this - contact the agent first to let her know he wants to sell the house himself and wants to be out? contact broker? or keep silent for now (wait until the agent reach out first and tell her)?

Your advice is greatly appreciated!

Hi @Sharon McKey , without seeing the actual listing agreement language it's impossible to answer that question for sure. A few thoughts though - in my area the seller can terminate the listing agreement, with some conditions. A main question in this kind of situation is who brought the buyer.

For example, if it could be shown that the buyer came to the seller because of the marketing efforts of the listing agent, that would likely have an effect on whether or not the listing agent was due all or part of a commission.

In this case the buyer is the tenant and therefore wasn't brought to the transaction via the listing agent (unless the listing agent procured them as a tenant in the first place, in which case I don't know if that would count), and the listing agent apparently hasn't spent any money on the listing yet. So at least in my area it would look pretty good for the seller.

There's probably language in the agreement that speaks specifically about termination. Without seeing the listing agreement no one can give you a 'for sure' answer, so look for that language and hopefully it's in there. 

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@Sharon McKey , the short answer is yes, but it can be complicated. The agreement you signed is a legal contract between you and a real estate brokerage to sell your home. If you and your real estate professional agree in writing to end the agreement before the end date, the agreement immediately ends.