The ease or difficulty of terminating a relationship with your real estate agent, as well as the potential consequences, depends heavily on whether the relationship is casual or is based on a signed contract. In some cases, a simple request is all you'll need to sever the relationship. In other cases, a signed contract makes breaking up much more difficult. In most cases, commission issues will linger.
Although inattention and unethical behavior play a role in some relationships, poor communication is the most common reason for the relationship between real estate agents and clients to sour. For example, a real estate agent may not clearly explain the process of selling your home, and you may expect too much from the agent. In some cases, talking it over can save the relationship and put both parties back on good terms. In other cases, parting ways may the best solution.
The Statute of Frauds requires that certain contracts be in writing to be legally binding. Among these are real estate brokerage contracts. If you don't have a signed listing or buyer's agent agreement, there is no need to terminate the relationship formally. However, informing the agent via telephone call or an email is a recommended common courtesy.
Attempt to terminate the relationship by asking nicely. If you explain your position politely and give good reasons, the agent may honor your request as long as the home isn't close to or in escrow. If you're able to reach an oral agreement, Bankrate recommends that you make it legal with a written "termination of agency form." Another option is to bypass the agent and speak with the broker who owns the agency.
If the agent or broker refuses to terminate, review a signed contract to see whether it includes a dispute resolution or cancellation clause.
- A dispute resolution clause will identify procedures for dealing with situations you can't work out informally. Among the most common is mediation or binding arbitration.
- A cancellation clause will identify the conditions under which you or your agent can terminate the relationship legally.
A contract that contains neither clauses means that you're legally bound for the contract term.
What Not to Do
Never sever the relationship by explicitly breaching the contract. Breach of contract may result in a lawsuit against you. For example, you can't fire your agent once your home is in escrow and then refuse to pay the commission the agent earned. If you're thinking about filing a lawsuit against your agent for acting in bad faith, the time and expense involved in proving your claim often makes this a less than effective solution.
Commissions and Consequences
Terminating the relationship most likely won't terminate your financial obligation to pay commission fees if the agent was the procuring cause. This means the agent either showed you the property you eventually purchased or brought the buyer to you by showing the buyer your property.
The compensation or commission section of most contracts includes a disclaimer that requires you to pay the agent's commission if a purchase or sale in which the agent was the procuring cause takes place within a specific time after the contract ends. Even without the clause, if an agent can prove that his efforts directly led to the purchase or sale, you may still be liable to pay him a commission.