How to Fire Your Realtor®?

| Selling

You’ll find yourself signing more than a few contracts and agreements throughout the real estate buying and selling process. But what happens if you sign a representation agreement with a REALTOR® and are unhappy with the service provided? In this post, we explain how representation agreements work, and what to do when you can’t shake the feeling that something’s not right.

What is a Representation Agreement?

A representation agreement is a legally binding contract between you and the brokerage. Also known as buyer, seller, or listing representation agreements, the exclusive agreement entitles you to representation by a licensed REALTOR® along with specific services offered by the brokerage. These services vary from brokerage to brokerage, so it pays to do some shopping around to find a brokerage and REALTOR® that meets your needs.

Tip: Don’t sign an agreement stating, “This contract is non-cancellable.” In this case, you will likely face cancellation penalties or be obligated to use another REALTOR® from the same brokerage.

Do you have more questions about the ins and outs of a typical real estate transaction? 

Choose the Right Type of Representation Agreement

In Ontario, there are brokerage representation agreements that offer services provided by all agents at the brokerage with a primary contact or designated agreements with a single agent assigned as your representative, who often works with other agents as part of a team.

Designated representation helps you avoid the risks associated with “multiple representation,” where an agent or brokerage represents both the seller and the buyer in the same transaction or two competing buyers bidding for the same property. While multiple representations can happen with designated agreements, it is less likely an agent representing you will consider asking if it’s okay for them to represent other buyers or the seller. With a brokerage agreement, any agent at your brokerage can be working with the seller or other buyers. In both cases, the agent has to provide written notice telling you:

  • There is a multiple representation situation happening
  • How it might impact the brokerage and your agent’s duties
  • Impact on the service you can expect, and any brokerage payments owed

You then have to give permission for them to proceed. If you do not agree, you can cancel your designated agreement, but in the case of brokerage representation, some agreements allow the brokerage to assign a different agent, leaving you in the same no-win situation.

Tip: Avoid signing with an seller’s agent you meet at an open house. They are likely looking for multiple representations to increase their commission on the home sale.

Learn more about working with a real estate agent to buy or sell a home with these posts next: 

Expiry & Holdover Clauses

There are no legal limits to agreement expiry dates, which is why you have to check the terms to avoid getting tied in longer than expected. You also need to be hyper aware of what is known as a “holdover clause.” This tricky little item means you could owe money to the brokerage via commission when you buy or sell a home despite the agreement expiring. Holdovers are 100% brokerage skewed, helping them earn money even when they lose a client. Because there aren’t any set times legally, holdover clauses are probably the most important thing to look for before signing an agreement. You’re often looking at 30 days following the expiry, but that can stretch to 90 days or longer with some brokers.

So what happens if you’re caught in an agreement with a holdover clause and sell your home? If the sale takes place within the holdover timeline and you’ve signed an agreement with a lower commission than the first broker, you might end up owing the difference to the old agent. Luckily, you would never have to pay commission twice. So for equal or higher commissions, the full amount goes to the new broker.

And for a buyer? If the first brokerage shows you a home, but the offer is prepared and accepted with your new agent, you might have to pay the first brokerage commission. This sucks, as the seller is actually the one who pays the commission for both their agent and yours. So while the seller will cover the new broker’s commission, you could end up owing a reduced commission to the broker who originally found the home for you.

Get more buying and selling advice by reading these posts next:

Good Reasons for Representation Agreement Termination

Some common circumstances that lead to representation agreement termination include:

  • Missed opportunities or delays caused by poor communication on your REALTOR®’s part such as delayed offers, viewings, or showings
  • Lacklustre involvement in meeting your goals or needs, including zero support, not accompanying you on visits, and not managing a listing with appropriate strategies such as open houses, ads, price adjustments, etc.—you get the picture
  • Not representing your best interests, such as commission-driven listing prices or strategies, only showing you the highest-priced homes in your budget range, or suggesting multiple representations

Whether you’re buying or selling a home in Toronto, choosing the right real estate agent is the first step in any successful transaction. To learn more about what you can expect from The Christine Cowern Team, get in touch with us today by calling or sending us an email directly.