Seller Advice: Changing Real Estate Agents
Realizing that your current listing agent isn’t getting the job done can be disheartening, especially if you have a signed contract with your agent that outlines their responsibilities.
The good news is that plenty of sellers end up changing real estate agents for one reason or another, even if the agreement hasn’t expired. But both parties have to be willing to part amicably, and there’s a right way and a wrong way to let your agent know things aren’t working out.
Reasons for switching real estate agents
There are many reasons a seller might decide to switch to a new agent. Here are a few of the most common:
Lack of communication: Your agent doesn’t answer when you call and is generally hard to reach, or they don’t provide updates after showings.
Lackluster marketing tactics: Your agent doesn’t make much effort to promote your listings on multiple channels. They aren’t investing in paid marketing options, or they may not offer professional photography.
Unreliable or unavailable: Your agent doesn’t give you advance notice for showings, or they miss appointments.
Uninformed or unfamiliar with the market: Your agent doesn’t know enough about the local market, lacks a network of buyer’s agents, or doesn’t have the experience to recommend an appropriate listing price.
Disinterested: Your agent passes all tasks off to their team or an assistant when you were expecting to be working together directly.
Disagreement: You and your agent may have differences of opinion on important matters like sales price, marketing strategy and how to handle negotiations.
Dishonest: Your agent withholds information or doesn’t inform you of all offers — this is usually a breach of contract and an ethical violation.
Attitude: Your agent is rude to potential buyers, other agents or you.
Real estate listing agreements 101
If you’re thinking about switching real estate agents, the first thing you should reference is your current listing agreement, which is formally called an “exclusive right to sell,” an “open listing” or “exclusive agency.” It’s important to read it carefully, as it’s a legally binding document.
First, check the expiration date. If you’ve reached the end of the agreement, you can change agents with no problem (the length of the agreement often depends on how quickly homes are selling in your area). But if your agreement is still valid and you’re looking to terminate early, you’ll need to do your due diligence to find the best path forward.
When is an agent entitled to a commission?
Generally speaking, an agent is entitled to their commission if they’ve completed work on behalf of the seller. Examples of the work would be providing pricing advice, preparing or marketing the home, or reaching out to potential buyers.
The reason real estate agents have their clients sign listing agreements is to ensure they’ll get compensated for all the upfront work they do to find a buyer for your home. It protects the agent from having a seller cancel the agreement as soon as an offer is received, then skipping out on paying commission.
Most listing agreements, and specifically exclusive-right-to-sell listing agreements, include the following clauses that dictate when an agent is promised their commission:
When the listing agent finds the buyer: If your agent found your buyer (or the buyer’s agent who represents your buyer) and you agree to the price and terms, your agent is due their commission.
When a buyer submits a full-price offer: If your agent brings you a full-price offer and you don’t accept, the agent might still be due their commission.
When the seller finds their own buyer: Even if you find your own buyer, your agent may still be entitled to their commission, depending on the terms of the agreement. Agents typically spend money on marketing that is recouped in their commission, and they’d be spending this money regardless of where the eventual buyer comes from.
When the listing agent has a carryover clause: If you relist with a new agent but a previous buyer came back, you might owe your first agent the commission, because they found the buyer originally. This clause, which is also called a holdover clause, is usually valid for a set period of time (e.g., within one year).
Steps to changing real estate agents
If you haven’t reached the expiration date of your listing agreement, you’ll need to request an early termination before you find a new agent, sell for sale by owner, or sell to an investor, like an iBuyer.
This checklist is meant to be a starting point. Always consult an attorney when dealing with contracts of any kind.
1. Check the agreement for a cancellation clause
A cancellation clause may allow you to terminate the agreement without penalty as long as you give a certain amount of prior notice.
2. Assess the fine
See if there’s a fine or penalty for canceling the agreement early.
3. Inform your agent as soon as possible
You don’t want your agent to feel blindsided, so let them know as soon as you can that you aren’t happy and wish to part ways. If you have a good relationship with your agent, they may be willing to waive any cancellation fees — this is common among reputable agents.
4. Put it in writing
Right after you’ve informed your agent verbally, you’ll want to put your cancellation request in writing. No specific format is required, but you’ll want to keep it professional and perhaps list a few concrete reasons why you’re canceling.
5. Have your agent sign the cancellation letter
Ask your agent to acknowledge the letter by signing it and returning it to you. Ideally, if they’ve agreed to the cancellation, they’ll sign within a day or two.
6. Speak with their broker or managing broker
If your agent refuses to let you out of the agreement, talk to their supervisor — who is usually a broker, team leader or managing broker — and explain the situation. They might be willing to assign you another agent from the team so they don’t lose your business completely.
Changing real estate agents amicably
Even if you don’t mesh well with your real estate agent, it’s in everyone’s best interest to part amicably. After all, it’s possible that down the road the agent will have a buyer that might be interested in your home! And it’s easier to come to a resolution on canceling your listing agreement if both parties can cooperate.
Be courteous: Start by thanking your agent for their work. Show appreciation for the effort they put in, even if they weren’t the right fit for you.
Inform early: As soon as you feel like it’s not working out, let them know. You don’t want to waste their time.
Discuss legalities: Be upfront about asking what needs to be done about the contract.
Ask for referrals: If you’re parting ways because your current agent doesn’t have enough time for you and they admit to it, you might ask for a referral to another agent.
Make it final: Once you’ve decided to break it off, don’t let them talk you into staying if you know it’s not going to work.
When to work it out
If it’s early in the listing process and you’re feeling unhappy with your agent, communicate this before firing them. It’s possible you’re just not used to working together or they’ve misunderstood some of your needs. It can be worth trying to rectify the situation first and set clear expectations for working together, before attempting to get out of your contract.
I fired my real estate agent. Now what?
After you’ve successfully split with your first listing agent, it’s time to figure out how you’ll move forward in selling your home and if you’ll hire a new agent or not.
Find a new agent
If you plan on hiring a new real estate agent, don’t make the same mistake twice. Here’s what to look for in a new agent. And if you don’t know where to start, you can find a list of agents in your local area.
Seek referrals: Recommendations from friends and family members can be invaluable, but make sure you’re not hiring someone just out of obligation. Seek out referrals from people who have actually sold recently.
Ask for listing presentations: Interview at least three agents and request that they come prepared with specific data on your home and neighborhood, as well as a proposed marketing strategy.
Don’t disregard a newer agent: A newer agent might work twice as hard to prove themselves, and they also might be willing to discount their commission, while still providing full-service representation.
Understand how teams work: If you’re considering working with a veteran or very popular local agent, keep in mind that you might end up working with someone on their team and not the main agent. Some teams have four or more people working on one single transaction, so make sure you know who you’ll be dealing with.
Ask about recognition, accolades and industry groups: Leading agents are usually recognized for being in the top 10 percent of their market, based on yearly sales. Also, ask if they’re part of any networking groups that give them access to a wide range of buyer’s agents.
Set expectations: Be clear from the very start about what you’re looking for in an agent. Be forthcoming about what didn’t go well with your old agent so the new agent has a chance to let you know if they can provide the type of service you’re looking for.
Make sure you’ll get their full attention: If you’re wanting all the services of a real estate agent, make sure to hire a full-time professional agent who will be available when you need them.
Review the contract
The second time around, you’ll know what to look for in a contract. While it’s unlikely you’ll find yourself in the same situation again, it’s still smart to review the cancellation clause in the new contract.
Remember that your agent has to protect themselves as well, so the agreement should spell out circumstances in which the agent should receive their commission.
Finally, you should make sure anything you’ve talked about with your new agent gets documented in writing — things like whether they’re going to pay for professional photography, the types of marketing included, and when open houses will be held and how much advance notice you’ll receive.
Consider an alternative
Remember that you don’t always have to use a traditional real estate agent to sell your home — sellingis another option. Selling your home to Zillow allows you to bypass the listing process completely and get a cash offer on your house, without having to use an agent to find a traditional buyer.
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