Can I Back Out of a Contract with a Real Estate Agent? Here’s What You Need to Know

Signing a contract with a real estate agent is an important step, whether you’re buying or selling a home. It formalizes your working relationship, outlines expectations, and gives the agent the right to represent you. But what happens if you’re not happy with the partnership? Can you back out of a contract with a real estate agent? Here’s what you need to know to navigate this tricky situation.

Understanding real estate agent contracts

When you agree to work with a real estate agent, you’re typically signing either a buyer’s agency agreement or a listing agreement if you’re selling a home. These agreements establish the agent’s responsibilities, outline commission details, and define how long the contract will last.

Before you sign anything, it’s crucial to read the terms carefully and ask questions about anything that’s unclear. Most contracts will include specifics about how to terminate the agreement, including any penalties or conditions.

Reasons you may want to back out of a contract

There are several reasons you might consider backing out of a contract with your agent, including:

1. Lack of communication: If your agent isn’t responding to calls, emails, or texts in a timely manner, you may feel neglected and question their commitment to your needs.
2. Poor performance: Whether they’re not delivering the results you expect, or their marketing strategy isn’t effective in getting your home noticed, performance issues can lead to frustration.
3. Change in circumstances: Sometimes, life changes—like job relocations, family emergencies, or a change in financial status—can lead you to put a pause on your real estate plans.
4. Conflict of interest: If you find out your agent has a conflict of interest, such as representing both the buyer and seller without proper disclosure, you may wish to end the relationship.

What happens if you want to terminate the agreement?

Most real estate contracts will have a clause that outlines the process for terminating the agreement early. Depending on the terms, this could include a notice period (such as 30 days) or a cancellation fee. The specifics of termination clauses can vary widely between agents and brokerages, so it’s essential to understand the terms before signing

When you work with a Redfin agent, transparency is at the core of the process from the start. Redfin agents provide clear contracts that outline service expectations, commission rates, and the duration of the agreement. Depending on the negotiated terms of your agreement, you may be able to cancel at any time, and for any number of reasons.

Options for backing out of a real estate contract

Here are a few steps you can take if you want to end your agreement:

1. Communicate your concerns: Before jumping straight to termination, try having an open conversation with your agent. They may be able to address your concerns and adjust their approach.
2. Request an early release: If you’ve decided that backing out is the best option, approach your agent directly and request an early termination of the contract. Some agents may release you from the contract without penalties if they feel the relationship isn’t working.
3. Review the termination clause: If your agent isn’t willing to release you from the contract voluntarily, review the termination clause in your agreement. This will tell you what steps to follow and what fees, if any, you’ll owe.
4. Speak to the brokerage: If your agent is part of a larger brokerage, reach out to the broker to explain your concerns. In some cases, the broker may assign you a new agent within the same company, or they may allow you to end the contract altogether.

The impact of the NAR settlement on real estate agent contracts

The recent NAR settlement has brought more transparency to real estate commissions and agent contracts. As of August 17, 2024, buyers now agree to their agent’s commission before touring homes. This means that agents are explicit about the fees involved, which has created clearer expectations from the start.

Additionally, the settlement has encouraged more competition and negotiation regarding real estate fees, which could make it easier for you to discuss concerns about your agent’s performance or negotiate a mutually agreeable way to end the contract if things aren’t going well.

While these changes primarily focus on commission transparency, they’ve also put a spotlight on agent accountability. Agents are more motivated than ever to provide exceptional service to retain clients, meaning that if you’re unhappy, you’re in a stronger position to voice your concerns and explore solutions.

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