Hiring A Top Local Real Estate Agent to Sell Your House Fast
When selling your home with a Realtor, you will be required to sign a listing agreement. Although the listing agreement is a legal document, Sellers often simply sign without reading it over. This attitude may set you up for problems down the road. Before signing the listing agreement, understand these common mistakes to avoid legal and financial pain during this joyous moment. Here are the things that sellers need to be aware of and avoid when negotiating a listing agreement with a Realtor:
A “listing agreement” is a contract between a real estate agent (the listing agent) and a home seller
1.Not Including a Termination Clause
There are many reasons that you may choose to cancel a Listing Agreement; including, personality conflicts, disagreement on marketing strategies or list price, and so on. Regardless of the reason, it is a wise idea to specify your rights and expectations during such a scenario.
2.Avoid Having to Pay a Commission Twice
Similar to not including a termination clause above, despite how wary you are in choosing the right Realtor, the relationship may not work out and you’ll need to find a new Realtor. To avoid having to pay a commission to both the previous and current Realtor, make sure the Listing Agreement includes a clause to this effect. Most good Realtors would already include this in their Listing Agreement, but make sure you confirm.
3.Avoid Paying the Commission Before the Closing
Between the time of a signed contract and the actual closing date, a lot could happen. The buyer could have cold feet, their loan could be denied, or any number of reasons. To avoid having to pay the commission and end up with not having a completed sale, Sellers should make sure the Listing Agreement contains a clause that payment of commission would be paid from the Closing Proceeds. This would ensure that your Realtor works hard for you through the entire process.
4.Not Negotiating the Commission
Most Sellers assume that the commission is non-negotiable, this could end up to be a big and costly mistake. Depending on where you live and the “sellability” of your property, commissions generally range between 5% and 7% of selling price. It is important that you negotiate the commission to where you feel comfortable. There are lots of ways to structure a commission. In addition to a lower commission, you may choose to pay 6% on the first $500K of the sales price and 5% on the remaining. This strategy would increase the likelihood that your Realtor will fight to get the highest selling price possible.
5.Be Aware of Junk and Hidden Fees
Most Sellers fall prey to junk and hidden fees that come with the sales process, assuming that these are written in stone. These fees include items often called documentation preparation, processing fees, or any number of official sounding terms that could add hundreds or thousands of dollars on top of your Commission Fee. Negotiate these junk fees before signing the Listing Agreement.
6.Not Limiting the Term of the Listing Agreement
Sometimes life plans change and you no longer wish to sell. Most Listing Agreements will default to 6 months or longer and most Sellers accept that. However, this term is entirely negotiable, like everything else. There is no requirement to have an Agreement for a minimum amount of time, so it is up to the Seller to choose a timeframe that you are comfortable with. Of course, to make it fair to the Realtor who will be investing her time and resources into marketing your property, negotiate a time limit that works for both parties.
Ask your real estate broker to explain the contract term and the commission protection period
7.Avoid Having to Pay a Commission After the Termination
Some Realtors will include wording in the Listing Agreement that entitles them to a commission even after the expiration date, sometimes up to six months. This happens when a potential Buyer comes back after the Listing Agreement has expired and offers to buy your property. This could potentially force the Seller to pay commissions long after you have ended the agreement. To avoid this, negotiate to reduce the time limit to three or four months.
These are just some of the most common mistakes you could easily avoid by working with an honest and professional Realtor. Realtors with strong ethics and customer focus will discuss these items (and more) with you so that both sides could make informed decisions.