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Seller questions cancelation fee after disagreement with agent
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Seller questions cancelation fee after disagreement with agent

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Q: A year and a half ago I listed a parking space for sale with a real estate agent. When the listing was about to expire, I relisted it for six months. Last week I got a request from the agent to list it for another year. I instead opted for three months and she had a fit. She demanded that I renew for a year. When I resisted, she said that she didn’t want to work with me anymore and that I should send the cancellation fee of $350 to her office.

Can she dump me and charge me for it? There is a $350 fee written into the contract if the listing is canceled or expired, but I didn’t cancel it! I sent her my authorization to extend it for three months, then even changed it to six. Can she just arbitrarily do that?

A: It’s unfortunate that your relationship with your real estate agent had to end that way. There are two aspects to your question that we’d like to address. The first is the issue of what was written into your listing agreement. You mentioned that the listing agreement has you paying a $350 fee if you cancel the listing agreement or upon the expiration of the listing agreement. We haven’t seen the actual language in the agreement, but based on the information you provided, you owe the listing agent the fee.

On a separate note, we don’t know why you’d want to continue to work with this agent. You and she don’t appear to be on the same page with regard to the listing. Even if they aren’t going to be BFFs, we feel that sellers and the listing agents they choose should work well as a team and actually like working together. When we see disagreements between owners and their listing agents, we believe it’s a signal for the seller to move on and find someone else with whom they’re more simpatico.

Your situation sounds a bit hostile. And that’s not optimal, even if you and the agent have the same goal: to get your property sold as quickly, and for as much money, as possible.

Having said that, we want you to reread your listing agreement in case you (or the agent) have misread what it requires. In checking out some of the listing agreements Sam has in his files, those listing agreements usually provide for the owner to pay the listing broker a fee upon the early termination or cancellation of the listing agreement. Please double check to make sure the language requires you to pay that fee if the listing agreement expires on its own terms.

We assume you agreed to pay a 5 or 6 percent commission to the listing broker for the sale of the parking space. Your deal with her was that she would find you a buyer and you would pay her a percentage of the sales price. You don’t pay the listing agent on an hourly basis but, rather, a percentage of the sales price. Sometimes the listing agent succeeds in selling the property and sometimes not.

The question, therefore, becomes whether a seller should pay a termination fee to the listing agent if the selling agent does not succeed in selling the property. Some agents have added different fees to their listing agreements to cover some of the listing expenses in case they can’t sell the property.

For example, if you hired an agent to list the property that charges you a flat fee for the listing plus an additional fee on closing or a reduced fee, the listing agent may want to add a termination fee (whether the deal closes or not) to cover some of the listing expenses.

Here’s something else: We don’t think your agent’s reaction to your requests seem reasonable. The listing agent shouldn’t dictate to you the length of time you’re willing to list your property. You’ve had it listed for a year and the parking space didn’t sell. If you and she had a good working relationship, the two of you would talk it through and come out with an extension that works for both of you.

The agent has lost you as a customer and lost your referrals. Given her reaction, you’re better off finding a different agent willing to work with you. You can leave it at that, and pay the fee, or talk to her managing broker to let that person know how the relationship soured and how she dealt with you in the end. You might also use that time to protest the fee. Frequently, managing brokers can smooth things out and, in some cases, waive fees due to a soured relationship.

Thanks for writing.

(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through their website, bestmoneymoves.com.)

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