Did your real estate listing agreement expire? Learn what went wrong so you can plan your next moves wisely. —-
When you signed the listing contract to put your house on the market, you had high hopes for a quick sale. Those first few days were a roller-coaster of emotions, as every showing brought a new chance for an offer — and then the letdown when it didn’t come.
As the days turned into weeks and the weeks into months, the less likely it seemed that your house would sell. And now you’ve realized that even the listing agreement with your agent has expired. Where does that leave you?
We’re here to help you figure out your next steps. We spoke with two seasoned real estate agents — Andrew Poe in Knoxville, Tenn., and Brian Fitzpatrick in Waltham, Mass. — to get their take on the most common reasons listing contracts run their course. We’ll fill you in on what obligation (if any) you have to your agent and what your options are to complete the sale.
How long are most listing agreements?
A real estate listing contract is a signed agreement between you and your agent or brokerage, stating that the agent has a certain amount of time to sell your house in order to receive the agreed-upon commission. Ultimately, the length of a listing agreement is up to the agent and the seller. Six months is an average timeframe, but it can also be as short as one month, as long as one year, or any length in between.
Knoxville, Tenn. agent Andrew Poe’s brokerage typically sets 180-day contracts (roughly six months), and Brian Fitzpatrick, an agent in Waltham, Mass., says his brokerage prefers 120-day contracts (approximately four months).
If your listing contract is expired and you choose not to renew it, the agent removes your property listing from the MLS, hiding the listing from buyers. It also means you are no longer obligated to use your real estate agent to sell your home. In essence, you and your house are now free agents.
Common reasons that listing agreements expire
In the six years that Poe has been with his brokerage, he’s only seen four or five listing agreements expire. “It’s my opinion that if a listing expires, we have not done our job,” he says. Fitzpatrick agrees that it’s rare — but it does happen occasionally.
If your listing agreement expired, it could be due to one of these common blunders:
There’s been a lack of communication
If your listing agreement expires, it could be a sign that you didn’t choose the right agent for your home sale. Poe notes that some agents make the mistake of only communicating when an offer comes in.
“If a listing expires, we have not communicated thoroughly with the seller about why or what is keeping the house from selling,” says Poe. “We’ve fallen short on providing constructive feedback and working with the seller to figure out the disconnect.”
Top agents regularly update their seller clients on buyer feedback, comparable sales, and market fluctuations. If a home sits on the market, they’ll work with the seller to pivot the selling strategy (e.g., stage the interior, lower the price, etc.).
Poe, for instance, strives to get value out of every showing, even if the buyer isn’t a match. “Even if an offer doesn’t come in, there is almost always something we can act on or improve upon based on the buyer’s feedback,” he says. “The key is to have continual conversations.”
The house is priced too high
If you listed your home above fair market value, that could very well have contributed to the lack of activity. A top agent knows how to price a home competitively. But if you’re working with an inexperienced agent or if you choose to push back on an agent’s recommended price, that could keep your home on the market longer than you’d like. In fact, HomeLight’s recent Top Agents Insight Report reveals that overpricing is the biggest mistake sellers make when selling their homes.
“It could be that the agent wasn’t proactive about finding the right price in the first place, and then they let the house sit on the market without making any attempt at a price adjustment,” Poe shares.
Fitzpatrick currently has a contract that is about to expire, and he says the sellers know they priced the home too high. After the contract expiration, he expects the clients will sign a new contract with him and agree to a lower asking price.
The pictures weren’t up to par
According to a survey by the National Association of Realtors (NAR), 87% of buyers cited photos as a highly useful source of information about a property. With 90% of today’s buyers going online to look at homes, having high-quality photography is a must to catch buyers’ attention and compel them to schedule showings.
“Professional photography is an essential part of properly marketing a home and presenting it in its best possible light,” says Poe. “If your agent used terrible cell phone photography or really bad lighting, your home may have had a poor online presentation. No matter how good it looks in person, if it looks bad online, you won’t get the response you want.”
You didn’t stage your home
“One likely reason that a contract might expire without a sale is if the house sits on the market for an extended period of time without any attempt to rejuvenate the home, such as dramatic improvements, painting, or landscaping,” says Poe. “In many cases, nothing changes from the time the property enters the market until it expires.”
To set your home apart from other listings, it’s important to present it in the best possible light. This usually means decluttering and staging to appeal to more buyers. In some cases, you may opt for some light remodeling to help your home compete with similar, more updated homes on the market.
Sixty-seven percent of top agents say that home staging helps a seller get a higher price for their home. According to HomeLight’s Top Agent Insights Survey for Q1 2019, more than 75% of top U.S. agents have offered staging services to their real estate clients, either directly or via a staging expert in their network.
Factors outside your control reduced buyer interest
Sometimes there are extenuating circumstances that make a property tougher to sell. The following factors, for instance, may limit your buyer pool:
If you’re up against one of these selling challenges, your ability to sell ultimately comes down to pricing. If you’re highly motivated to sell, you might be able to offset some of the perceived negatives by sacrificing a little on price.
“If all the other boxes are checked — staging, repairs, improvements, marketing — it’s reduced to a pricing situation,” Poe explains. “If the seller is looking at comparable sales and expects to get the same price, I would explain that those other homes don’t have the same limiting factors.”
Does the agent get commission after a listing agreement expires?
In most cases, the agent is not entitled to a commission if he or she does not sell your house before the contract expires.
But there is an exception if the listing contract included a “safety clause” or “protection clause.” This clause states that you must pay the agent a commission if you sell to a buyer whom the agent introduced to the property — even after the listing agreement expires. This clause, which is typically in effect for up to 90 days after the contract’s expiration, is designed to prevent sellers and buyers from colluding behind the agent’s back to get out of paying commission fees.
“If I take a buyer into a home, and then the listing expires, and the seller opts not to re-list, but the buyer comes back and buys that home soon after, I would have a right to that commission,” Poe explains.
If you already knew the buyer before listing your house, the safety clause doesn’t apply. So if your old college roommate toured the house with your agent, you’d be free to sell to her, fee-free, immediately after the contract expires.
What are your options after a contract expires?
Whatever the reason behind your listing agreement expiring, you still want to sell your home. So where do you go from here? There are a few different paths you can take:
Extend the existing agreement (or draw up a new one)
If you have a good relationship with your agent and feel confident that he or she can ultimately find a buyer, consider renewing the existing agreement for another agreed-upon term. In Fitzpatrick’s experience, sellers choose to renew expired contracts about half the time.
If you decide to continue working with your agent, take this opportunity to draw up a new contract if there are any terms you want to add or change. It’s also a good idea to meet with the agent to review possible reasons for the house not selling, brainstorm potential improvements or corrections, and strategize a new plan of attack.
Sign with a new agent
Sometimes, even if they have the best intentions, an agent just isn’t the right fit. You might want to look for someone else if you notice that your agent:
Seems spread too thin
Lets you call all the shots without offering any guidance
Drops the ball during negotiations
Shows signs of dishonest or otherwise unethical behavior
Don’t risk hiring the wrong agent a second time — choose an agent based on data. Plug your address into HomeLight’s Agent Finder, and we’ll match you with three top agents who have successfully sold similar properties in your area.
Poe also points out that in his state of Tennessee, sellers can begin interviewing other listing agents before the contract has expired. “The only caveat is that the seller has to make contact with the potential next broker. That broker cannot contact the seller first while still under right of sale agreement,” he explains. Then, as soon as the contract expires, the seller can pivot to the newly selected agent.
Sell your home “For Sale By Owner”
If your home didn’t sell with the help of an agent, you may feel tempted to re-list “For Sale By Owner” (FSBO). In 2020, 8% of sellers sold their home on the market without a real estate agent. Why so few? Most FSBO sellers work twice as hard only to sell their homes for less than they could have with an agent.
With FSBO, you’re on your own to coordinate and pay for listing and marketing, schedule showings, negotiate with potential buyers, and handle paperwork and closing details.
Also, keep in mind that FSBO homes statistically sell for less money than agent-assisted sales. According to data from Collateral Analytics, real estate agents sell homes for 6% more than FSBO sellers do. According to the National Association of Realtors (NAR), the typical FSBO home sold for $217,900 compared to the $295,000 that agent-assisted homes sold for in 2018.
Bottom line: If you struggled to sell your home even with an agent’s expertise, going FSBO probably isn’t the best route.
Temporarily rent your home
Another option is to move out of your house and rent it to a tenant. Once you execute a lease, your house qualifies as an income-producing property, which could help you qualify for a loan for your next home before your current property sells.
Sell your house for cash instead
If the idea of starting over with a new agreement sounds exhausting, consider selling your home for cash. iBuyers (or internet buyers), buy-and-hold investors, and flippers offer to quickly purchase your home with cash, closing within weeks or even days. Although the sale price will likely be less than what you’d get selling to a traditional buyer on the market, saving time and energy could make the trade-off worthwhile.
“When selling to a cash buyer or iBuyer, there are fewer closing costs involved, so the hypothetical net proceeds may end up being more favorable than you expect,” says Poe.
To find cash buyers near you, take advantage of HomeLight’s Simple Sale. Just enter your address, and we’ll gather offers from our network of hundreds of pre-approved real estate cash buyers or investors. Once all offers are in, we’ll show you the best cash offer side by side with what you could make selling on the market with a top agent.
Header Image Source: (Roger Starnes Sr / Unsplash)
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