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Selling Your Home ~ Don’t Be Bulldozed by Your Realtor 
by Stacci May 23, 2005

A person who wishes to sell their property usually signs a contract with a real estate company. The contract is called an Exclusive Seller Representation Agreement. This agreement is the initial contract between the seller and the realtor and signing such a contract without having precise knowledge of its content could be a costly mistake. At worst it could mean that no one else, including you, will be allowed to sell your property without the realtor getting a commission.

Exclusive Seller Representation Agreement

You’ve always been warned to ‘read the fine print,’ and for good reason. Some of us tend to check the main points we want covered and skim over the rest, trusting that we are dealing with honest people. Contracts are, by their very nature, obtuse and hard to read. When you are selling one of the biggest investments you have obtained in your life, it is truly important that you read the fine print!

Content of the Contract

There are variations from state to state and the contract may be called something other than an Exclusive Seller Representation Agreement. By whatever name, a rose is still a rose. To sell your property through a realtor, you usually have to enter into some sort of contract with the realtor. The Exclusive Seller Representation Agreement can cover such common subjects as:
  • The seller is retaining (hiring) the realtor to sell their property.
  • The amount of time that you will allow the realtor to attempt to sell your property - In general, a realtor will attempt to sign you up for an entire year. Do you really want the realtor to own the right to sell your home for that long? Realtors may dislike a shorter time period, but you can specify as little as 3 months. In this day and age, advertising your home is almost instantaneous so stand firm and don’t let the realtor bulldoze you. Besides, the realtor has an ace up his sleeve usually hidden under the Brokerage Fee (more about that later).
  • The property address and legal description.
  • The price, down payment, acceptable selling terms.
  • Title and Existing Encumbrances – Any loans or liens you have against the property.
  • Multiple Listing Service Authorization – Allows the realtor to put your home and information about your home on the internet; a real plus as your property is instantly advertised on the world-wide marketplace.
  • Duties of the Realtor – Your protections under this contract should be addressed in depth, including the realtor’s confidentiality duty to you.
  • Information Warranty – The information you give had better be true, don’t try to hide things; it could cause problems laters.
  • Transaction Related Services Disclaimer – If the Seller (You) hires someone that the realtor suggests to fix a problem and it creates even more problems then the realtor is not to be blamed. For example, if your pipes are leaking and the plumber that the realtor recommended destroys your hot water tank, you can’t sue the realtor. Don’t rely on the realtor’s advice; investigate any professionals before you hire them.
  • Included Items - Don’t think you can take your great-grandpa’s wood stove or your prize rosebushes; items attached to the real estate are automatically included. Make certain you clearly state those items excluded from the sale.
  • Severability – If an item in the contract is found to be invalid, the remaining provisions are not impaired. In plain English, if the Seller or the realtor makes some sort of error it doesn’t necessarily mean the entire contract is void.
Any number of subjects and/or conditions can be covered in a real estate contract and you must take the time to read and understand all of them. There are ways you can protect yourself and retain the right to eventually fire your realtor in the event you feel it necessary to do so.

Take Control of the Real Estate Contract

Some sections of the Exclusive Seller Representation Agreement warrant a very thorough examination. Before signing the Exclusive Seller Representation Agreement you should put the following sections under a mental microscope.

Consent to Limited Dual Representation and Assigned Agency

You must keep in mind that realtors work for a commission check; they are not in the business of volunteering their time and effort. The commission is most often split between the realtor selling your property and the realtor representing the buyer. If a realtor is lucky enough to sell your home to a buyer they are representing, then they don’t have to split the pie. Under Limited Dual Agency, your realtor will know your secrets, such as the least amount you’re willing to sell your property for.

The realtor will also know the buyer’s secrets, such as the highest amount the buyer is willing to pay. This could work against you or for you, depending upon the circumstances. Realtors are usually ethical and remember – the higher the sale price, the bigger the commission check. You can generally consent to Limited Dual Agency as confidential information, which might be to the Buyer’s benefit, cannot be revealed without your permission. By default the realtor’s duty is to the person selling the property. In most cases, Limited Dual Agency is okay for the Seller but a bad idea for the Buyer.

Seller Notification and Consent to Release from conflicting Agency Duties

This section of the contract usually just rehashes the previous section. Read it carefully for any subtle additions or clauses. Realtors don’t want to get sued or have to deal with sticky legal issues (who does?) so they want to make sure you understand that they might represent potential buyers.

Seller’s Property Disclosure Form

A potential buyer makes an offer on your place and puts down earnest money. At that point you have a set amount of time to provide the buyer with a Property Disclosure. If the buyer finds something on the Disclosure that is unacceptable, then they can rescind (take back) their offer without losing their earnest money. Make sure you are accurate and honest when filling out this form; avoid problems later on.

Brokerage Fee - Know YOUR Rights

Realtors understandably want to protect their investment (time, effort, money) in selling your property. The Brokerage Fee section of the contract is usually found right on the front page and deals with, not only their payment for selling your property, but an obtuse clause that a Seller would not typically associate with a discussion of realtor fees. This ‘fine print’ subject is solely for protection of the realtor and, while it may not be labeled as such in the contract, it is commonly known in the real estate industry as the Protection Clause.

Brokerage Fee Section

Real estate commissions are generally from 6 to 10 percent across the country, depending on the type of real estate. Why is the fee stated in terms of percent instead of dollars and sense? Fees are stated in percent primarily because the real estate market is based on commissions.

A realtor wants to sell your property for the highest price, because they get bigger commission check. This commission system motivates realtors to work harder at getting the highest price for the Seller. Another added benefit to the realtor is the same idea behind an automobile being priced at $2999 instead of $3000. Doesn’t it sound better to hear you have to pay 6% of $100,000 than have to shell out $6,000?

Allow Only the Smallest Bite Out of Your Apple

You can negotiate with the realtor what percents you want to pay for selling your property. Say commissions are running around 6% for homes in your area. If you tell the realtor you’re willing to pay 3% to him and 2.5% to the buyer’s realtor, you’re saving .5% of the commission. If your home sells for $100,000, then you just put $500 back in your pocket. It’s no skin off your realtor’s nose as their piece of the pie is still intact and you’ve saved yourself a hefty chunk of change. This strategy is especially effective in a Seller’s Market (more people trying to buy homes than people willing to sell their homes).

Hidden Realtor Protection

Finding the right realtor is so important; you don’t want to get stuck with someone who isn’t willing or able to give you the best service in selling your property. Buried in the Broker Fee section of the contract is terminology that won’t let you fire your realtor or sell your property yourself for a specified amount of time, even if the realtor sits back and does absolutely nothing to sell your property.

In legalese (lawyer talk) the wording could be something similar to: “the brokerage fee is payable if the property or any portion thereof or any interest therein is, directly or indirectly sold, exchanged or optioned or agreed to be sold, exchanged or optioned within _______ days following expiration of the term hereof, to any person who has examined, been introduced to or been shown the property during the term hereof.” If you read something similar to the above statement written into the contract that your realtor hands you, your first thought would probably be, “What in the heck?!” Any intelligent person would most certainly be excused for not realizing just how insidious that little paragraph is.

Look at that paragraph closely. In plain English it says that you have to pay the realtor’s commission if your property or any part of your property changes hands to anyone who has seen or even heard about your property. Whatever number is inserted in that blank effectively allows the realtor to be paid if you or someone else sells your home even after the contract has expired.

There are probably some unscrupulous people who hire a realtor and then try to sell their property to someone the realtor has brought to them without paying the realtor’s commission. This little clause protects the realtor, but it also effectively stops you from firing an incompetent realtor. Don’t allow this to happen to you. Make sure the number written in that blank is either a big fat zero (0), or at most, 30 days.

Read the Fine Print and Know How to Protect Yourself

You have the right to pay whatever commission percentage you want and you have the right to limit the amount of time you’ll allow the realtor to attempt to sell your home. If you want to take those prize rosebushes, you can, if you fill in the blanks properly. Speak up and make sure the blanks of the Exclusive Seller Representation Agreement are filled in with data that benefits you.


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