BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
Listing Withdrawal or Listing Cancellation?
Q: I am a listing agent. After 75 days on the market, my seller told me she wants to give the property (and her) a rest and try again in a couple of months. I have a 180-day listing agreement, so there are 105 days left on the listing. I wanted to accommodate my seller, so I sent her an email, confirming that we agreed to “withdraw the property from the market.” I then withdrew the listing from the MLS and cancelled the advertising. I never actually cancelled the listing nor agreed to do so.
Three days later I saw the same property in MLS listed with another broker. That same day, one of the buyers to whom I had showed the property came back to me and wants to write an offer. I talked to the seller who said she believed that we had cancelled the listing and was free to re-list with another broker. I am upset since I think my seller lied to me, and also I should be the listing agent on this buyer's offer.
What can I do, and how can I make sure this doesn't happen to me again?
A: This is a common situation when a seller wants to either withdraw the property from the market or cancel the listing. However, these are two totally different things and you, as listing agent, must be specific about what you are agreeing to.
Here, it is clear that the seller either misunderstood what you had agreed to, or was just taking advantage of the situation. You can point out to the seller that you still have a valid, binding listing agreement and have a right to represent the seller on any offers for the remainder of your listing period. The problem is that you and the other listing broker will be fighting it out because the seller may likely get an attorney who will state that the seller is only going to pay on one listing agreement. The seller’s attorney will likely assert that you created the problem by not making clear that the listing was not actually cancelled. These fights can get ugly and expensive — usually resulting in a settlement with you receiving, at most, some small portion of the listing commission.
When talking to your seller, be sure to distinguish between “withdrawing from the market” and “cancelling the listing.” If you are withdrawing from the market, you still have a valid listing agreement, but have chosen to cease marketing activities for a time. If you cancel a listing, then the listing contract is completely terminated – but you can specify the terms on which you are agreeing to the cancellation.
WITHDRAWING FROM THE MARKET: If you and your seller agree to just withdraw the listing from the market for a time, usually just temporarily, you can just create an addendum to your listin agreement stating that you both agree to withdraw the listing from the market for a specified time, after which you will commence marketing again. Then, notify the MLS on the proper form indicating that the listing has been moved to the appropriate inactive or withdrawn status. Remind your seller IN WRITING that you still have a valid, binding listing agreement.
CANCELLING THE LISTING: If your seller wants to actually cancel the listing, remember that a seller cannot do so without the written permission of your manager or broker. If you do agree to a cancellation, you will want to be sure to protect yourself from the situation above, where a seller then promptly re-lists the property, and/or where a buyer to whom you showed the property shows up and wants to buy.
FORM: CAR has created the “Cancellation of Listing” form (zipForms form COL) which covers these issues. You can choose a total cancellation, with no obligations by either party. Or you can agree to some compensation: (a) for prior expenses; or (b) if the property sells during the remaining term of your listing agreement; or (c) if the seller re-lists with another broker.
You can also use this form to carry over the protection period in the listing agreement to the persons you name in the COL form. These “protected” persons must meet the criteria specified in the COL and in the listing agreement.
(PRDS Listing Agreement forms only: Be sure to add the following in COL paragraph 5, or attached addendum: “The names in paragraph 1.B. above also meet the criteria of paragraph 10.d. of the Listing Agreement, which criteria are incorporated into paragraph 1.B. above.”)
PRACTICE TIPS:
1. Remember, sellers cannot unilaterally withdraw the listing from the market or cancel the listing without your permission. If they do, then under the terms of the listing agreement, you have earned the right to be paid the full commission based on the listed price. If a seller attempts to withdraw or cancel without your permission, discuss with your manager.
2. Be sure you and your seller are clear on what you are doing: withdrawing or cancelling. It will be helpful if you always use these terms properly as defined above.
3. If you are just temporarily withdrawing the listing from the market, make sure your seller understands that you still have a valid, binding listing agreement. Clearly document to the seller IN WRITING what you are agreeing to so there is no misunderstanding later.
4. If you agree to cancel the listing agreement, use CAR form “Cancellation of Listing,” discuss with the seller the choices being made, and document those choices in the COL form.
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© Copyright Broker Risk Management 2013 11/08/13