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Can I expire my real-estate contract of 1 year after 6 months without paying significant penalties?

Madison, WI |
Filed under: Real estate

I have had my home listed for about 18 months with the same realtor. We listed for 1 year, then signed again for another year. We would now like to cancel our contract and move on to another realtor or do FSBO, But the realty company says we may "owe in excess of half of the expected commission" on our house for advertising and time spent marketing. Our list price is 340k and this amount we may owe sounds excessive to me. I have talked with another realtor in the same firm and they told me this was not common practice.

Attorney Answers 3


I'd have to see the contract before I could say what penalties you might incur for walking out on it. However, a contract is a contract -- and mostly they are binding on both parties. It's not a joke that you should read all of the fine print before you sign, not after.

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Your first step should be to find the Listing Contract that you signed.

Next look for the "Termination of Listing" Clause. It may appear as follows:

■ TERMINATION OF LISTING: Neither Seller nor Broker has the legal right to unilaterally terminate this Listing absent a material breach of contract by the other party. Seller understands that the parties to the Listing are Seller and the Broker(firm). Agents (salespersons) for Broker (firm) do not have the authority to enter into a mutual agreement to terminate the Listing, amend the commission amount or shorten the term of this Listing, without the written consent of the agent(s)’ supervising broker. Seller and Broker agree that any termination of this Listing by either party before the date stated on line 259 shall be indicated to the other party in writing and shall not be effective until delivered to the other Party in accordance with lines 193-198. CAUTION: Early termination of this Listing may be a breach of contract, causing the terminating party to potentially be liable for damages.

Notice the last sentence is a caution to the buyer.

Your listing contract may have different language.

Verbal statements by a broker on termination of the listing will not suffice for your purposes. You should know in advance what the "supervising broker" expects for advertising and time spent marketing before you consider termination. Also, you should consult with an attorney and prepare a release of the listing contract that is signed by you and the supervising broker before you move ahead with another realty firm or do FSBO.

This information is designed to provide a general overview with regard to the subject matter covered and is not case specific. The authors, publisher and host are not providing legal, accounting, or specific advice to your situation.

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Both answers on this thread are good and substantive. Ultimately however, the consequence of terminating the listing agreement early can be whatever you and the realtor agrees they will be - if you make a written amendment to the listing agreement.

So if it were me, I would follow the advice on this thread and read the contract, watching particularly for the provisions dealing with termination, damages, penalties and payments. They are in the contract for a reason and remember, this agreement was probably drafted by someone looking after the realtor's interest, not yours. So you may not find much comfort there.

But - you will also be likely to find a provision that leaves open the door to an amendment of the contract. Think about using it.

Then talk with the realtor. You may find that you are closer to being on the same page than you are assuming. think about what needs to be done to make the realtor whole - they may have shelled out a few hundred dollars for print advertising, for instance. Be prepared to pay them back expenses like that. If you can have a discussion about what they need to be made whole instead of whether their "1/2 commission" language is nice or not, you may find yourself approaching a decent compromise.

But - as has been said, look before you leap. Good luck.

The above response is commentary and is not legal advice, not may it reasonably be relied upon by any person as in the nature of legal advice. No attorney client relationship with any person is created hereby and such is specifically disclaimed.

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