A property seller signs a listing agreement with a licensee. what is this an example of?

When an agency agreement is cancelled, you must give the vendor the names of any potential buyers you introduced to the property and tell the vendor that, if any of these potential buyers purchase the property, this may result in you being entitled to a commission.

This applies even if you are using the standard clauses for residential or rural agency agreements. Learn more about our recommended standard clauses for residential and rural agency agreements here.

The 5.00pm window for cancelling a sole agency agreement

If the vendor changes their mind after signing a sole agency agreement, they can cancel it (in writing, by letter, fax or email) by 5.00 pm on the first working day after they have been given a copy of the agreement.

However, if you carry out any work before the agreement is cancelled that results in the sale of the property, the terms of the agency agreement will be legally binding.

If the client signed the agreement after an unsolicited approach from you, they may cancel the agreement within 5 working days of receiving a copy of the agreement. Cancellation does not need to be in writing in this case.

Cancelling a sole agency agreement after 90 days

If the sole agency agreement is for a residential property and for a term longer than 90 days, you or the vendor can cancel the agreement any time after 90 days.

What happens once a sole agency agreement is cancelled depends on what the agreement says. If your agency uses the standard clauses, refer to the standard clauses for residential and rural agency agreements section on our website here.

Most general agency agreements will specify the notice period for cancelling the agreement. The notice period is designed to give the agency the chance to conclude any introductions.

There is nothing in the Act or the Code that specifies how long the notice period for the cancellation of a general agency should be. Industry practice is usually between 7 and 14 days.

You may be at risk of breaching the rules if you make your notice period longer than 14 days.

Thinking about putting your home up for sale? It's a good time to learn about the different types of listing agreements.

The best choice for you will depend on your situation. It will also vary, depending on your ability to tackle some or all of the home-selling duties. The state of the real estate market will be a factor as well.

What Are the Different Types of Listing Agreements?

The most common listing agreement choices are open listing, exclusive agency listing, and exclusive right-to-sell listing. Here are the major differences among them.

Open Listing

An open listing lets you sell your home by yourself. It is a non-exclusive agreement. This means that you may place open listings with more than one real estate broker. You then pay only the broker, who brings a buyer with an offer that you are willing to accept.

The one major advantage to an open listing is that you will likely pay only a selling broker's commission, which is about half of the typical fees.

If you find the buyer yourself, you will not owe anyone a commission. You will still need to pay closing costs and possibly real estate lawyer fees, but you will not be on the hook for an agent's payment.

Exclusive Agency Listing

An exclusive agency listing is like an open listing. The major difference is that the broker will represent you. As the owner, you will still reserve the right to sell the property yourself and not pay a commission.

The broker is free to cooperate with another brokerage, which means that the second brokerage could bring in a buyer. Typically, the buyer's broker is paid a listing commission that is split with the seller's broker, which means that you would pay both fees.

Note

The broker's payment is often negotiable. As the seller, you may come out of negotiations paying both fees.

Exclusive Right-to-Sell Listing

An exclusive right-to-sell listing is the most common type of listing. It gives the broker the exclusive right to earn a commission by representing the owners and bringing a buyer, either through another brokerage or directly.

As the owner, you pay both the listing and selling broker fees. You cannot sell the property yourself without paying a commission unless an exception is noted in the contract.

An exception to the contract might allow you to sell the house yourself, however. For instance, suppose that your next-door neighbor expresses an interest in buying your house. In that case, the broker might give you a set number of days to produce a contract with the neighbor without owing a commission. 

Other Terms and Conditions to Consider

The duration of the listing agreement is negotiable. Common terms are 30 days, 90 days, six months, one year, or more. Ask about cancellation rights. If you can cancel at any time, the length of the listing contract might not matter.

The commission you pay is an important consideration. When there are more available houses than buyers, you may want to consider paying the agent more than if there were more buyers than houses available, because the agent will be working much harder to find you a buyer. They will negotiate for your interests.

For instance, if the total commission is 6%, and the listing broker wants to offer 2.5% to the selling office, you could instead insist on paying 3%. Be careful, though. Buyer's agents are generally paid according to market norms. If you try to change the formula, the listing agent might refuse to take your listing.

Pay Attention to Contract Terms

A broker or agent might not let you cancel a contract. Before you sign a contract, ask whether you will be able to get out of it if you are not happy with the services being provided.

If the broker will agree to let you cancel at any time, the term of the contract won't matter, but you should be aware of holdover agreements or other post-contract responsibilities of both parties.

If a contract expires without mutual renewal, or if the parties elect to cancel the contract, the listing broker might supply you with a list of names of prospective buyers the broker produced.

If any buyers listed by the previous agent approach you within the time period specified in the holdover portion of the contract and successfully purchase the property, you could owe a commission.

Frequently Asked Questions (FAQs)

How do you terminate a real estate listing agreement?

To terminate a real estate listing, you should reach out to your agent as soon as possible and ask for a release from the contract. This release should be in writing. If you are unable to completely cancel your existing listing agreement, you may be able to negotiate new terms, so ask your agent what options you have.

Who must sign a listing agreement?

The people who are required to sign a listing agreement may vary from agreement to agreement, but you can always expect that the homeowner and the broker to need to sign. Keep in mind that your real estate agent will not necessarily be your broker, but they may sign the agreement as an authorized representative of the broker (depending on local laws and customs).

What or who does the seller hire with an agency agreement?

Which of the following is true of a listing agreement?

What is the standard for agency representation in Illinois?

Which one of the following provides the best example of single agency?