27 Jul Can I Fire My Real Estate Agent?
Wonderful question! There are over 40,000 real estate agents in Toronto. Over half don’t complete 1 transaction a year. Chances are you might get stuck with a lemon. Many people ask me “Can I fire my real estate agent?”. Today I’ll give you the official legal answer as well as the real life answer (because I know you all want to hear that one instead).
Before we dive in, here are the usual complaints I hear:
- My real estate agent is too pushy
- My real estate agent never answers my texts/calls/emails
- My real estate agent doesn’t listen to what I say
- My real estate agent is too slow at getting things done
What does the buyer representation / listing agreement contract say?
So officially you are bound by the contract you have signed. This document would be a buyer representation agreement (when buying a property) or a listing agreement (when selling a property). You may or may not have signed this agreement. It depends on your real estate agent. Some agents will shove it in your face the first time you meet. Other real estate agents will let you view a few properties before making you sign. Sometimes you won’t sign it until you put in an offer on a property. If you haven’t signed anything then you can pretty much get away with anything. It is the real estate agent’s job to get it down on paper. If you have not signed it yet or are about to sign it (or looking to see if you can fire your real estate agent) here are the important things to note:
1. When does the agreement start and end?
2. What location does the contract cover?
Number 1 is self explanatory. Number 2 isn’t much harder, but it is important to note that you can write a few different things for “geographic location”. You could put a city, an area, a community, a country or you could be as specific as a single property. You are only bound to that real estate agent if the the property you are looking to purchase is located in that geographic area. Usually you will find very general search areas (GTA, Toronto and surrounding area etc). This means you are stuck with the agent no matter where you look.
3. What is the holdover period?
The holdover period is always a bit confusing. It is there to protect the real estate agent for any property that was introduced to the buyer during the contract period. It is in place so that you don’t wait out the contract period, then go to the seller yourself and strike a deal for a lower price by cutting out the commission. Of course this would never work in a hot market since houses sell in less than a week. But on a unique, unpopular, rural (you get the drift) property, it could be a possibility. A more likely scenario is that someone is looking around for properties with an agent, then a family member says “you should use my cousin Vinny! You didn’t know he was a real estate agent? Since he only has to sign the paperwork maybe you guys can strike a deal”.
So how does this holdover period work? The original agent gets the Difference in commission of a property that was introduced during the contract timeline. I know… it still does not make sense. Luckily I made a diagram:
The “that was introduced during the contract timeline” is a no brainer. It is the difference in commission that confuses people. Just think of it this way: if the commission that your new realtor is going to get is lower, then you will have to pay your original realtor the difference up to what your original realtor was going to make. Still confusing?
Original Realtor A commission: 2.5%
Realtor B commission is for some reason now: 1%
Realtor A gets paid the difference: 1.5%
I’m wasting time on something that doesn’t even matter (as I will later explain in the “real life” part of the post). The important part here is not to get bullied by an agent that says this holdover period means that you still have to pay them regardless of the situation.
How do I officially cancel my contract with my real estate agent?
The official way to get rid of a real estate contract is to terminate the original agreement by way of official forms (cancellation of listing and termination of buyer agency agreement). You need mutual consent to break a listing agreement so it is very possible that the brokerage will not release you from the contract. Remember: you have signed an agreement with the brokerage, not the real estate agent. The real estate agent is just acting on behalf of the brokerage. If you real estate agent refuses, you can escalate your issues to the brokerage.
So how does the above all play out in real life?
The truth is that there are a lot of horrible real estate agents out there. There are also a lot of horrible clients as well. I’ve never had any issues with my buyers and my sellers. I have had a few buyers come over from some pretty bad real estate agents. Everything was done properly of course (No contracts were signed. They tried viewing some properties without an agent and the listing brokerage shoved some pushy agent on them).
Let’s break it down into a few groups:
I don’t even bother signing contracts with clients who are looking to rent. I’ve driven some people across the city in rush hour traffic to look at rentals just to have them find a place on Kijiji the next day. I’m fine with this because I’ve taken a calculated risk. How soon do they want to rent? Do they seem to have an income the landlord would accept? Do they seem like good people? Are most places they want to see vacant allowing for easy in and out access?
The reality is that renters will find a place to live no matter what the contract says. Good luck trying to get anything out of them. They will just stop responding to calls, emails and texts. Is the real estate agent really going to spend their time going to court for a few hundred dollars? The answer is always no. This is the way it happens in real life. It is unfortunate for real estate agents, but if you are showing places to someone who is unemployed with two 50 pound bulldogs, you are doing it to yourself.
When Buying A Home
This is where we find the most problems. As I mentioned at the beginning of the post, the common issues are: too pushy, too slow, sends me horrible listings after specific instructions, can never get a hold of them & lastly cannot write their own deals. I can understand the frustration because I also deal with a lot of these same real estate agents. I call, I text, I e-mail, I page them through their office and get no replies. In a market where the average house is listed on a Monday then takes offers on Sunday, you need someone who is going to get back to you promptly.
Most people who are stuck with crummy real estate agents will just tell them they have changed their minds or will just stop responding altogether. There is no way for real estate agents to track purchasers. Usually it is pretty early on in the search (a week to three weeks). Most don’t have a contract in place and therefore don’t feel guilty approaching someone else. I understand that nobody wants to spend time and gas and risk not getting paid but I also believe that if you treat your clients right then you will never have an issue. Some real estate agents are unaware of the shifts in technology and the needs of an instant gratification society. I understand nobody will be an expert overnight, but change is inevitable in any industry.
When Selling A home
It is pretty much impossible to abandon your real estate agent when selling a home. They will be able to see the new real estate listing with the new real estate agent and claim the commission. You would have to wait out the contract. Of course you could always just go ahead with it and tell them to sue you. They may or may not depending on the situation. Since I always love being fair and honest, there are always 2 sides to these stories. It might not be the real estate agent. A real estate agent can only do so much. If the price is too high because the seller insisted on hitting a certain number, then it is not the real estate agent’s fault.
So there you have it. To summarize:
Real life: if you want to fire your real estate agent, just ignore them or tell them you’ve changed your mind and no longer plan on buying.
The official way: Wait out the contract or ask to terminate the contract.
Norman Hill Realty Inc
20 Cachet Woods Court #2