How To Get Out Of A House Contract

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If you're unhappy with your real estate agent, you don't have to continue working with them. However, you may have to pay a fee if they require you to sign a contract. ( iStock )

Buying or selling a home is a huge decision with a lot of moving parts. That's why most people hire a real estate agent to help guide them through the process. This sometimes involves signing a contract, which isn't a big deal if you get the outcome you want.

But sometimes things don't work out. When that happens, here's how to get out of a contract with a Realtor® or real estate agent.

What to know about real estate agent contracts

Real estate contracts are agreements between two or more parties involved in a real estate transaction. Types of real estate contracts include leasing agreements, listing agreements, and buyer's agent agreements.

Although laws vary by state, real estate contracts normally have to be in writing to be enforceable.

Contracts are necessary because they outline what's expected of each party involved.

For example, a purchasing agreement is a contract between a buyer and a seller that includes the purchase price, earnest deposit amount and other important details.

Having a contract in place can protect all parties, including buyers, sellers and real estate agents. For instance, a purchase agreement that includes an appraisal contingency can protect a buyer from purchasing a home for more than it may actually be worth.

As real estate agents, a contract ensures that they get paid their commission when a real estate transaction is completed. Like any other contract, an agreement with a real estate agent is legally binding. This means that if you break it, you may have to pay a fee.

You can get help finding the right real estate agent for you when you use Credible to get personalized recommendations for local real estate agents.

What's the listing agreement?

A listing agreement is a contract between a brokerage firm and a home seller. The broker, real estate agent and seller(s) sign the agreement, which gives permission for the agent (or broker) to sell and market your home.

Although there are different types of listing agreements, the most popular one gives the agent an exclusive right to sell your property for a specific amount of time and prevents you from selling your home without the agent receiving a commission.

Additional terms of the contract vary, but usually include:

Sales price of home — This is the price you and the agent agree on before putting it on the market.
Marketing methods — A brokerage firm normally asks your permission to use certain marketing channels to advertise your home. For example, it may ask to place for-sale yard signs on your property or post it on a multiple listing service (MLS).
Broker's commission — This is the fee the agent receives if your home is sold — it's usually a percentage of the sale price.
Expiration date of contract — Just in case a deal is not closed, the seller and real estate agent can agree to end the contract on a specific date.
Protection clause — Some listing agreements include a protection clause that allows the Realtor or real estate agent to receive commission if the home is sold during a window of time after the contract expires.
Real estate agent duties — The agreement includes all the required duties of the agent, such as coordinating showings of the property, communicating all offers to the seller and collecting all deposits from potential buyers.

How to get out of a listing agreement

You may wish to terminate the agreement with the real estate agent if you're unhappy. First, try working things out by addressing your concerns with the real estate agent.

If the real estate agent is unwilling to release you from the contract, ask to speak to the broker they work for. The broker may be able to assign you a different agent or let you out of the contract.

If you still can't work things out, read through the contract thoroughly before trying to break it. In some cases, the agreement will include a termination fee that covers an agency's marketing expenses. A lawyer can help you interpret the terms of the contract and decide the best course of action to take.

What's a buyer's agent agreement?

A buyer's agent agreement is a contract between a brokerage firm and a homebuyer. It outlines how you and a real estate agent will conduct business together. The agreement is signed by a buyer, real estate agent and a broker.

Unlike listing agreements, buyer's agreements aren't commonly used. Because a seller, and not a buyer, pays commission, many real estate agents won't require a contract to work with buyers.

If you sign an exclusive buyer's agent agreement, it locks you into working with only one agency. A non-exclusive agreement, on the other hand, allows you to work with multiple agencies. The agency that signs the agreement is required to perform all the duties listed.

Although terms vary, the buyer's agent agreement usually includes:

Expiration date — This outlines the amount of time you agree to work with the agency.
Real estate agent duties — When you hire a buyer's agent, they typically agree to find and show you homes in your price range and negotiate on your behalf.
Buyer duties — Signing this agreement as a buyer may require you to agree to submit financial documentation, such as tax returns, bank statements or W-2s.
Exclusivity or non-exclusivity clause — In some cases, the agreement may be exclusive, meaning you agree to work solely with the agency to find a home for a certain period of time. However, some firms may allow you to choose a non-exclusive option.

How to get out of a buyer's agent agreement

Similar to getting out of a listing agreement, you should try to speak with your real estate agent to work through any issues. If you can't work things out with them, consider reaching out to the broker they work for. The brokerage firm may assign you a different agent or let you out of the contract.

Before you cancel, make sure you review the terms of the contract. If the agent or broker refuses to cancel the contract, consider reaching out to a lawyer to explore options available to you.

The consequences of terminating a buyer's agreement will depend on the contract. Some contracts may stipulate a cancellation fee.

Whether you're looking for a real estate agent to work with you as a buyer or a seller, it's free and easy to get personalized real estate agent recommendations when you use Credible.

Reasons to fire your real estate agent

Canceling a real estate agent contract can be a challenge that has legal and financial ramifications, so be sure you have a good reason before deciding to part ways with your real estate agent. Reasons to fire your real estate agent may include:

Lack of results — If you're not getting the results you want, like more offers on your home, it may be a sign that you need to switch agents.
Poor communication — A real estate agent who isn't responsive can delay your goal of selling or purchasing a home.
Unethical behavior — If your real estate agent engages in any unethical behavior, such as revealing confidential information, they may be in breach of contract.
You change your mind — Just because you sign a contract, this doesn't mean you have to buy or sell a home. If you change your mind, inform your real estate agent as soon as possible.
Ineptness — If a real estate agent doesn't seem knowledgeable about the housing market in your area or how to do their job, you should consider finding a new one.

How to find a good real estate agent

Although finding a good agent can be tough, you can improve your odds by searching multiple places.

Attend open houses. Attending open houses in your area could allow you to observe a real estate agent in action.
Ask for referrals. If you know someone who has recently purchased or sold a home, ask them for a recommendation.
Check out listings in your area. When you search for property listings, contact an agent if their information is provided.
Interview multiple real estate agents. Before you sign a contract with a real estate agent, speak with several of them and ask good questions to see whether they'd be a good fit.
Sign up for online referral services. Look up online real estate agent referral programs to connect with real estate agents in your local area.

You can also use Credible to tap a nationwide network of more than 90,000 real estate agents and find an agent that's right for you.