Limited-Service Listings Come With a Full-Service Contracts

May 30, 2007 |

Being in real estate, people love to share their real estate stories with us.  It is always interesting to hear the perspective of others.  One such recently shared story involved a couple who had listed their home with a limited-service real estate brokerage. Basically, for a fee, this company would put the home in the local MLS.  That’s it.  Everything else was left up to the homeowners.  The homeowners had to coordinate the marketing, showings and, had a contract come in on the home, the owner would have had to go through that process on their own as well.  There are a number of these companies out there.

Unhappy with the way things were going, the owners decided that they would rather try their hand with a full-service real estate brokerage.  They thought that changing brokers should be easy.  “After all,” they said, “the home was For Sale By Owner.”

You see, to them, the home was “for sale by owner.”  They were the ones doing all of the work.  The brokerage merely placed the home in the MLS.  What they did not realize, however, was that in order to place the home in the MLS, the brokerage required them to sign an Exclusive Right To Sell agreement.  This agreement is the standard listing agreement that most sellers sign when listing their home.

In thinking that their home was  “for sale by owner” they thought they could just switch listing brokerages.  They called up the new agent that they wanted to work with, and tried to do just that.  What they did not realize, and what that new agent informed them of, was that because of the Exclusive Right to Sell agreement, the new agent was precluded from doing anything with their house until the expiration of the agreement.

The owners were stunned.

Luckily for them, they were able to call up the limited-service brokerage, voice their dissatisfaction with the way things were going, and obtain a release from the agreement.  They promptly listed with their new agent, and all was right with the world.

Things did not have to go that way.  In fact, because of the Exclusive Right to Sell Agreement, the limited-service company could have actually refused to let them out of the agreement and held onto the listing until the agreement expired.  In fact, the Virginia Association of REALTORS standard Exclusive Authorization to Sell agreement contains no provisions for canceling the agreement, other than the expiration date.  The agreement is also pretty vague when it comes to the responsibilities of the owners and the broker.

What you can learn from this story is to be very aware of the documents that you sign.  They are legally binding documents, and you should fully understand them before you sign them.  And if you choose to use a limited-service brokerage, be aware that doing so comes complete with a full-service contract.  KNOW WHAT YOU ARE SIGNING.  If you know what you are getting into, it is a lot easier to get out when you need to.

[tags] real estate, realtor, charlottesville, virginia, limited service, listing agreement [/tags]

Posted by Daniel | Filed Under Selling 

Comments

2 Responses to “Limited-Service Listings Come With a Full-Service Contracts”

  1. Chris Lengquist on June 4th, 2007 6:26 am

    I used to sell in Tulsa where there were a number of these “limited service” brokers. As the buyer’s broker I was supposed to present the offer to the seller, explain the contract to them, answer their questions and basically put my client’s interests behind the questions of the Sellers.

    It was a ridiculous flaw in real estate law in Oklahoma, until they changed it shortly after I left.

    I wouldn’t boycott the listings, but I would explain to my clients, the buyers, that if I had to present their offer I was also going to have to give up any right to exclusive representation towards them. That was usually enough, in fact always enough, to have them say “let’s just move on.”

    So while I would never advocate a boycott of these types of listings I would advise any seller thinking of going that way that there are some buyers out there that don’t want their agent being a transaction broker when he’s supposed to be their agent.

    [Reply]

  2. Heidi Aspinwall on June 12th, 2007 11:45 pm

    Thanks for helping to inform sellers of the technicalities of selling through a limited service firm.

    [Reply]

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