Tread lightly when considering whether to sell within the listing-protection period following your house listing's expiration date, as you may owe commission to the previous listing broker. In addition to carefully reviewing your listing agreement's language, you may need to consult a real estate attorney to determine whether you can sell after the listing expires without having to paying a commission. The amount of time you wait and how you find the buyer can affect whether you owe your former listing broker a commission. The waiting period may last several months or be waived altogether.
A Tail of Two-Timing
A listing-protection clause in a real estate listing agreement protects the broker's interests. It discourages collusion between buyers and sellers. Unscrupulous seller's might use a broker's services to obtain buyer offers, then go behind the broker's back and sell to one of those buyers without paying a listing commission. The protected time frame, known as a "tail" period, is the amount of time a seller must wait after the listing agreement expires before entering into an agreement with a buyer. This period varies by contract and broker, but commonly lasts 90 days. Harvey Jacobs of the Washington Post recommends the shortest waiting-period possible, such as 30 days.
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Who Brought the Buyer?
The tail period is often misunderstood. It doesn't necessarily prevent you from selling your home, but it can limit who you can sell to without owing your former broker a commission. In general, selling to a buyer the broker procured, or who actively viewed your home during the listing period, can entitle the listing broker to a commission. Although the language in listing contracts varies, many state specifics as to what this entails.
When Things Can Get Sticky
Should you decide to sell your home before the tail period on your listing expires, you may not have to pay a commission if you sell to a buyer you meet after the listing expires, who comes to you without any assistance from the broker. For example, you might find a buyer yourself via the Internet or a friend's referral, after the listing expiration. However, if that buyer is related by blood, marriage or business to a buyer who previously viewed the home or placed an offer on it during the listing period, you may have to prove that there was no collusion.
The More Specific the Better
Ambiguity in a contract's protection clause may work in your favor if you decide to sell within the tail period. Courts usually use contract language against the party that drafted it, therefore, if a broker's firm wrote the contract without detailing specifics, a court might also read the contract according to the seller's interpretation. For example, in a 2007 Tennessee case, a court ruled in favor of a seller who sold her home to buyers that viewed the property one day after the listing expired. Because the broker's firm drafted the contract which stated that the clause applied to buyers that viewed the home within the listing period, and no written extension to the listing was made, the seller didn't have to pay a commission.
- Nolo: Signing a Listing Agreement with Your Real Estate Agent
- Washington Post: Everything is Negotiable, Starting With the Broker's Listing Agreement
- University of Missouri Kansas City School of Law: Daily Development for Friday, February 6, 1998: Brokers; Commission
- Realty Times: Listing Protection Clause Has Its Limits
- Tennessee State Courts: Crye-Leike, Inc. v. Sarah A. Carver