Breaking a contract with a realtor can be an uncomfortable but sometimes necessary decision.
Whether due to unmet expectations, lack of progress, or changing circumstances, it’s important to handle the process carefully to avoid potential fines or legal complications.
So if you’re wondering, “Can I break a contract with a realtor?” the answer isn’t as simple as just walking away.
Real contracts are legally binding, and terminating them improperly can lead to serious consequences.
In this guide, we’ll walk you through the steps to cancel a realtor contract while protecting your business interests.
Note: The information provided in this article is for general informational purposes only and is not intended as legal advice. Real estate laws and contract terms can vary by state and circumstance. Please always consult with a licensed attorney or real estate professional before making decisions about breaking or modifying a realtor contract.
What does a realtor contract include?
Your business relationship with a realtor starts when you have a verbal agreement that includes the elements of a valid contract, or when you sign a contract with them (on paper or eSignature).
In most cases, a contract gives the realtors the exclusive right to sell your property or to help you find a new one.
Realtor contract requirements:
- Written agreement: A signed document that defines the professional relationship.
- Scope of services: Outlining what the realtor will do. This includes marketing, showing properties, and negotiating offers.
- Compensation: Commission structure and payment terms. This is usually based on a percentage of the sale price.
- Term agreement: Start and end dates specifying how long the contract is valid.
- Property details: Addresses, listings, and relevant information about the property.
A listing contract specifies the realtor’s fiduciary responsibilities.
These legal obligations compel real estate agents to act in your best interest until the agreement’s expiration date.
For instance, if you have multiple offers above the listing price for a property your business is selling, the realtor must help you get the best possible deal.
Fiduciary responsibilities can include:
1. Adherence
A contract mandates the realtor to do everything you request of them in their line of business as long as it doesn’t violate the law.
2. Loyalty
The real estate listing agreement also stipulates that the agent must act only in the best interest of your business.
3. Disclosure
The realtor must relay all necessary information and policy regarding their firm, the offers they acknowledge for your property, and all other relevant information concerning the selling process.
4. Confidentiality
Your realtor must respect your private information. This includes items such as property inspection reports, financial details, and any agreements or contracts related to the sale. The realtor must keep all of this information confidential and not share it with anyone, not even potential buyers, unless you give your permission.
5. Accounting
The realtor must account for all the financial transactions.
That includes the listing price, upfront payments, and eventual sale price.
Reasonable care and diligence
The contract mandates that the realtor do their job properly.
They must inform you if they aren’t competent enough to take on any aspect of the job, so you can avoid legal or financial damage.
Lastly, the agreement will include contractual specifics like its timeframe, listing duties, fees, charges, disclaimers, and other conditions you must adhere to.
You should be familiar with the terms of your real estate agent contract prior to termination.
That way, you can void the contract without violating any terms.
If you’re unsure about the terms of your contract, it’s a good idea to consult with a real estate attorney who can clarify your rights and guide you through the process.
6 Reasons to terminate a contract early
Breaking a contract with a realtor isn’t something to take lightly, but there are situations where you may want to do so.
In general, a contract is a legally-binding agreement, and to break it, you need to have a legitimate reason supported by evidence.
Here are some grounds for doing so:
- Incompetence or poor performance. The realtor is incompetent and didn’t do their job correctly.
- Unprofessional behavior. If the real estate agent behaves unprofessionally, for example, a lack of communication or using manipulative tactics, it may be grounds for termination.
- Failure to use new trends and technology. The National Association of Realtors (NARS) reported that 97% of home buyers search for homes online. You may part ways with a realtor who can’t use the internet to help you make an excellent sale.
- Poor negotiation skills: If your realtor struggles to negotiate favorable terms or secure the best deal, this may be a valid reason for termination.
- Violation of the Realtors’ Code of Ethics. Real estate agents must abide by ethical standards. Breaching these standards may be reason to end the relationship.
- Breach of fiduciary duties. Violating fiduciary duties, including loyalty, full disclosure, and confidentiality, is grounds for termination.
It’s important to note that simply having one of these grounds doesn’t automatically void the contract; you usually need to formally terminate the agreement, which might involve notifying the realtor in writing and possibly dealing with termination clauses that outline how the contract can be ended.
Steps to take before terminating a realtor contract
Firing your realtor should be a last resort. Do the following before terminating your contract.
Review the contract
Carefully read the contract to identify any termination clauses, including notice periods and potential fees.
Look for contingencies that may allow you to cancel without penalties, including unsatisfactory inspections or other specific conditions.
Talk to your real estate agent
Have an honest conversation with your realtor about your concerns and the reasons you’re considering ending the contract.
Be open to solutions or adjustments your realtor may offer to improve the relationship.
Explore alternatives
If the conversation doesn’t resolve the issue, ask the agent’s broker to mediate and help find a fair resolution.
If possible, see if the broker can assign a different agent to work with you instead of terminating the agreement.
Consider breaking the contract
If no resolution is reached, reread the termination clause to fully understand the consequences of contract termination and any potential fees.
Send a formal written notice of your intention to terminate the contract, including your reasons and any relevant clauses.
How to get out of a realtor contract
If you’ve tried everything else to resolve your issues, it may be time to break your contract.
Follow these steps to break your contract the right way.
Prepare for potential legal action
If your attempts to resolve your issues have failed, consider consulting with a real estate attorney.
They can help you understand any legal implications, especially if there has been a breach of duties or unethical behavior by the realtor.
Notify the realtor
If you’ve exhausted other options, you’ll need to formally notify the realtor (and their brokerage) of your intention to terminate the agreement.
This should be done in writing and clearly state your reasons for ending the relationship, citing any clauses in the contract that allow you to do so.
Negotiate any penalties or fees
Be prepared for any financial consequences, such as cancellation fees or reduced commissions. If necessary, negotiate these fees with the realtor or their brokerage.
Some agents may be open to a reduced commission to avoid conflict, while others may require you to pay a cancellation fee.
Follow through
After sending your formal notice, make sure to follow through with the contract termination.
Ensure all paperwork is completed and keep copies of all correspondence and documents.
You’ll need this documentation for any future legal disputes or related issues.
Finding a reputable real estate agent
The best way to avoid the stress of breaking a realtor contract is to choose the right agent from the start.
Do your homework: Research credentials, read reviews, and ask the right questions to find a reputable, reliable real estate professional.
Consider the following tips for finding an excellent listing agent.
- Ask for recommendations
- Check Realtor.com for top-rated options
- Interview multiple realtors
- Consider only real estate brokers with a verifiable online presence, preferably a website
- Check the realtor’s online reviews and customer feedback.
Then, customize, negotiate, and eSign complex contracts with your preferred realtor using document automation software.
Sign a contract with the right realtor
Can you break a contract with a realtor?
Yes, but if you find the right one, you won’t need to.
Look for a realtor with a great track record, certifications, and membership in relevant professional organizations.
And when you do find one, use PandaDoc to eSign the contract and make it legally-binding.
PandaDoc helps you and your business partners sign documents faster. Try a free 14-day trial today!
Frequently asked questions
-
The cost to cancel a contract with a realtor depends on your location and the specific terms of your agreement. Any cancellation fees should be specified in your listing agreement.
If no specific cancellation fee is included in the contract, you might not face a penalty, and you can cancel the agreement without additional costs. However, some contracts might have clauses related to early termination that could require a fee or compensation to the realtor.
The bottom line is to review your agreement carefully and ask questions about anything that isn’t clear.
-
Yes, you can write your own real estate contract, either from scratch or by customizing a sample contract or template.
It’s important to make sure your contract includes all the legal elements, including buyer and seller details, pricing details, contingencies, and timelines, to ensure it’s valid and enforceable.
To avoid missing any critical elements, start with a real estate contract template and consult a legal professional for questions or concerns.
Disclaimer
PandaDoc is not a law firm, or a substitute for an attorney or law firm. This page is not intended to and does not provide legal advice. Should you have legal questions on the validity of e-signatures or digital signatures and the enforceability thereof, please consult with an attorney or law firm. Use of PandaDoc services are governed by our Terms of Use and Privacy Policy.
