Can you terminate a listing agreement?

If you want to sell your home and choose to hire a real estate agent, you’ll sign a listing agreement. This bilateral contract between you and your real estate broker or agent dictates that you will pay them a commission if they sell your home within a certain timeframe.

A listing agreement is a binding contract, but there are a number of ways to get out of one. Whether you change your mind about selling, have ethical or performance concerns about the agent, or you just don’t find a buyer, you can get out of a listing agreement. But before you sign one, you should understand your options for terminating a listing agreement so you don’t feel stuck in a bad situation.

What is a listing agreement?

Most listing agreements are structured to give the agent or brokerage the exclusive right to represent your home sale. They usually come in types:

• Exclusive right-to-sell agreements compensate the listing agent regardless of whether or not they found the buyer themselves.
• Exclusive agency agreements withhold agent compensation if the seller finds a buyer.

Listing agreements are typically written to expire after a certain amount of time, usually 60 - 180 days. They’ll also include details on early cancellation, which may require you to pay a cancellation fee. Always remember to read a listing agreement completely to understand exactly how long it lasts, what constitutes cause to cancel the agreement, and if you’ll have to pay a fee to end the contract early.

Why can you terminate a listing agreement?

While most agreements expire after a set time period, you may not want to wait that long without a buyer. (Especially if you’re motivated to sell!) Again, you should always read your listing agreement before signing because each may have different language explaining grounds for cancellation or mandating fees for early cancellation. That said, the most common reasons for being able to terminate a listing agreement with cause include:

• Poor communication: You may cancel a listing agreement due to an agent’s poor performance. So if they’re difficult to reach, rarely update you on what they’re doing, or fail to communicate with buyers’ agents, you can let them go.
• Bad marketing: Real estate is competitive, even in a seller’s market. If your agent created a listing with poorly lit photographs, misinformation, and an abundance of spelling errors, it’s not a good look for your house. Likewise, if they fail to list your home on the MLS, host open houses, or bring in any potential buyers, it’s grounds for termination.‍
• Unethical behavior: Agents have a fiduciary duty to serve a home seller honestly and ethically. Overpromising buyers on things you can’t deliver, flip-flopping on broker fees, and seeming too familiar with the potential buyers they’re bringing to you are all flags of potentially unethical behavior. If you ever feel like your agent does not have your best interest at heart, you can cancel the listing.‍
• No chemistry: Even in an exclusive listing agreement, you’re under no obligation to work with a real estate agent you don’t get along with or don’t like. You can simply wait until the listing term ends or cancel the agreement, either freely or by paying a fee.

When can you not terminate a listing agreement?

It’s much easier to terminate a listing agreement early on in the process than after it’s been active for weeks or months. Agents and brokers likely won’t put up too much of a fight if they haven’t done much work yet, but if they feel they’ve put a lot of time and effort into trying to sell your home only for you to attempt to back out, expect them to fight early termination.

If you attempt to cancel a contract to move to an agent who charges less commission or sell to a family member or friend to avoid paying commission at all, it will be very difficult to get out of your contract.

How do you terminate a listing agreement?

To terminate an already signed listing agreement, follow these steps.

Review your contract

If you’re feeling dissatisfied with your real estate agent or brokerage, before you do anything, look at your contract. It should have a section describing what constitutes a valid cancellation and if you’ll have to pay a fee.

Bear in mind that in an exclusive right-to-sell agreement, even after canceling, you may still legally owe the agent a commission if you sell to a buyer you found yourself. In an exclusive agency contract, you can avoid paying commission if you find a buyer yourself, but you cannot hire another agent to find a buyer.

Determine a reason for cancellation

When you find a reason for cancellation based on your contract, it’s time to contact your agent. Finding a new agent could be a hassle, so it’s best to give your agent or brokerage an opportunity to set things right. Put your experience in writing, explaining what you’re unhappy about and what, specifically, you feel justifies cancellation. An email works well.

Being civil, professional, and transparent about your discontent can wake an agent up to start working harder for you, or can make it more likely for them to let you out of the contract. You can either ask for reassignment to another agent within the same brokerage, or ask out completely.

Pay anything you owe

An agent is much more likely to let you out of a listing agreement if you agree to pay any costs they incurred in marketing or showing your home. If you must pay a cancellation fee, pay that without a fuss, and move on.

Lawyer up, if necessary

If an agent or brokerage refuses to cancel the listing agreement, it’s time to hire a lawyer. This can be risky since a lawyer will cost money too, and if an agent or brokerage is determined to play hardball, the conflict could escalate. If you’re very determined to get out of your agreement early and feel you have cause to do so, a lawyer can help with resistant agents or brokerages. If you’re not absolutely convinced you have cause for cancellation, it may be a better option to simply wait it out.