$10,000 penalty to have a listing agreement canceled??

General Real Estate Investing
1

I just got a call from a homeowner who is behind payments and perfect for a short sale.
However, the home has been listed for 4 months so far and the homeowner tried to have the listing agreement canceled, and the Broker/Manager of the Century21 office told them that they’ll be charged $10,000 if they cancel the contract.

Yes, you heard right, a $10,000 fine.

The homeowner said they’ve tried everything to have the listing removed, but with no luck. Looks like the realtor is taking advantage of them b/c they don’t speak English well and the realtor knows they’re behind on payments.

What options do they have?? I’d like to initiate the short sale process but I want the listing removed. I thought the homeowner had an upperhand in canceling the listing if he/she wanted to??

2

They signed a listing agreement/contract. Sounds like the broker wants his commission since there is a signed agreement. Sounds like the broker is aware that a buyer is found and the home owner is trying to avoid paying the commission?

3

Not at all, there is no buyer. The homeowner said there hasn’t been much activity in the 4months of listing. The house has no equity either so they are only looking to sell and walk away with their credit.

4

Read the listing agreement, what is it’s term? Also, $10,000 that’s crazy, even if it’s in the agreement I don’t think any court would uphold such and excessive charge.

5

Have them contact the state’s commission and file a complaint. I assume they discussed it with the broker directly and not just the agent.

6

Forget the commission, what type of “bargain” is the bank willing to take on the home?

Give us numbers… What is it on the market for now and how long?

                              What is the bank willing to take for it?

                              How much work does it need in dollars?
       
                              What kind of house and what part of the country?

Get us those answers and we can give you REAL feedback. It may be that it ISN’T the perfect short sale. Then again it might be.

Let us know.

7

If you plan on working the short sale, perhaps you should call the Board of Realtors and/or the state Real Estate Commission to run this ‘hypothetical’ situation by them. After that, you could talk to the real estate agent/broker… Be a consultant who would hope to help them avoid foreclosure:

“You know, Mr./Ms. Agent/Broker, we both understand how hard this market is right now, and that you have a duty to look out for the best interests of your clients who needs to get out from under their home. Tell me, what do YOU think the state board of Realtors would think if they knew a broker refused to let a homeowner pursue options to avoid foreclosure, just to keep a non-performing listing on the market? …seriously, do you really want to take advantage of someone who already can’t afford to pay for their home?”

It may or may not work, but it depends on what the local boards think of that broker’s practice.

8

Really simple.

If…IF you did not find this property through the efforts of the listing agent (from their sign for example), then all the sellers have to do is call up the listing broker and ask them to cancel the listing contract.

Why is this simple? Because it is a Century 21 office and they have a seller pledge which states that the listing can be cancelled at anytime, for any reason. If the broker wants to give the seller a hard time, simply offer your help to the broker in calling up C21 corporate to verify that pledge. Most brokers will become much more cooperative if their franchise is on the line (and it is!).

Now, will this save the commission? Maybe, maybe not. Most listing agreements have protection clauses concerning commissions and it will depend on how hard the agent/broker wants to fight it. Again, work the franchise, if need be.

Raj

9

All short sale homes have to be listed with a realtor or banks will not accept them. This is only proof the seller gave a real try to sell it for FMV but can not. On a S/S the bank will pay the realtor 2% in most states as a standard fee , especially if there is no profit to be made which happens in a S/S.
The realtor has a contract and despite poor showings , it can be b/c of a crappy realtor but also the seller picked them and they didnt do there due dilgence in picking a realtor.
Beside the realtor will help with the CMA and BPO you need to summit to the bank for S/S.