Do You Have to Sign a Contract With a Realtor? Real Estate Contract FAQs
You’re considering buying a property, but have a few questions about the process.
Do you have to sign a contract with a realtor? If so, what happens if something goes wrong?
Contracts can be confusing. You might not know what the consequences are if you enter into an agreement without fully understanding it.
In this guide, we answer frequently asked questions about real estate contracts so that you can know what contract terms are right for you.
Table of Contents
- Do You Have to Sign a Contract With a Realtor to Sell Your House?
- Do You Have to Sign a Contract With a Realtor to Buy a Home?
- Why Do Realtors Want You to Sign a Contract?
- What Happens if I Sign a Contract With a Realtor?
- Is There a Way Out of a Realtor Contract?
- How Long Are Most Realtor Contracts?
- What Is Included in a Standard Realtor Contract?
- What Makes PEGGY HOAG REAL ESTATE’S Contract Unique?
- PEGGY HOAG REAL ESTATE: Selling Luxury Properties in Oregon and Washington for Over 30 Years
Do You Have to Sign a Contract With a Realtor to Sell Your House?
Yes, to sell a property with a realtor, property owners need to sign a contract called a listing agreement.
This is a standard listing agreement used by all real estate companies as provided by the real estate agency in Oregon and Washington. This is a legally binding contract and gives the agent or broker the authorization to represent the seller and to list and advertise their property for sale on the market.
Do You Have to Sign a Contract With a Realtor to Buy a Home?
Yes, you have to sign a contract with a realtor to buy a home.
Most real estate agents typically use the standard purchase agreement as provided by the real estate agency in Oregon and Washington for residential homes.
However, the agreement can also be custom drafted, (most commonly seen in new construction).
Why Do Realtors Want You to Sign a Contract?
Realtors should require you to sign a contract to document that you have hired them as a real estate broker to represent you. Without a signed contract, their real estate license and brokerage firm does not permit them to take on the liability of representing a buyer or seller.
Contracts are also the only way to know that both parties understand and have agreed on the terms of the real estate representation contract. This helps to avoid disputes.
What Happens if I Sign a Contract With a Realtor?
Contracts are generally enforceable by law and are meant to protect parties from …
- Unfulfilled agreements
- Poor communication
- Missed deadlines; and
- Other problems
… that might arise during a transaction.
If you sign a contract with a realtor, you are legally bound to the contract’s terms and conditions in exchange for their services.
Is There a Way Out of a Realtor Contract?
A real estate contract is a binding agreement that provides the terms and conditions for the real estate broker to work on behalf of their client. The real estate broker is obligated to provide services per the terms of the contract.
However, there may be reasons why you might need to break your realtor contract in instances when the real estate agent or seller does not uphold the agreed-upon terms.
Some examples of this may include:
- If your agent is not following the provisions of the contract
- If your agent is not available for extended periods of time and has not provided a replacement broker for you during that period.
- If there has been a breach of trust or unethical behavior from your real estate agent; or
- As a result of misconduct, negligent behavior, or violation of contract terms by the realtor
No one wants to be stuck in a bad relationship, and if you are unhappy with the service that your real estate agent is providing, it’s okay to break up.
If you want to break up with your real estate agent, there are a few ways you can do it that are provided in your contract:
- You can terminate your contract by giving them a notice period, which varies from one agency to another.
- You can give them an early termination notice and pay for any future commissions they would have received, had you not terminated their services prematurely.
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How Long Are Most Realtor Contracts?
Most brokers require signing a contract for a certain amount of time, whether it be:
- Three months
- Six months
- Nine months; or
- One year
- The standard length of a realtor contract is 6 months. However, the contract length can be different depending on what the broker and seller agree upon.
What Is Included in a Standard Realtor Contract?
A realtor’s contract is the foundation of a residential real estate transaction.
A standard listing contract in Oregon and Washington contains several editable sections, such as:
- Price
- Commission
- Cancellation clauses
- Agent responsibilities
- Seller’s representations and responsibiities
- A timeline of the listing contract
- Specifications of the house; and
- Guidelines for handling disputes
A contract might require the real estate agent to promote the listing in various ways, such as on multiple listing services (MLS), the internet, and for-sale signs.
In a standard contract, you also give the broker the right to create marketing materials for your home including:
- Photos
- Graphics
- Videos; and
- Content descriptions
- Ad Copy
What Makes PEGGY HOAG REAL ESTATE’S Contract Unique?
PEGGY HOAG REAL ESTATE’s contract is unique because it includes a clause that states the contract can be terminated at any time by either seller or broker. This may be done prior to procuring an accepted offer on the property.
Here’s the story behind why this clause has been a part of PEGGY HOAG REAL ESTATE contracts for the past 30 years.
Peggy’s father was a custom home builder when she started working in real estate in 1991. Her father was working with a real estate broker, who had him sign a six-month contract to sell one of his new construction homes.
But there were problems:
- The real estate agent did not market the property well
- The brokerage wasn’t answering their phones
- Buyers looking for information on the home reported they were unable to reach a broker
- At 2 months the property was getting few showings and was not selling. At 3 months, the property had no showings in 30 days. Peggy’s father was unable to reach his broker.
This forced Peggy’s father into a situation where he had to pay interest on the construction loan for the duration of the listing, significantly eating into his profit margin for the home build.
He asked to get out of the contract, but the broker would not allow it. He was stuck in his contract — and the property never sold.
Thankfully, Peggy took over and sold the house two weeks later at a higher price as a brand-new agent.
That experience caused Peggy to always put a clause in her contracts that ensures the client is able to terminate the agreement at will.
In turn, she also has the option of terminating.
It’s a contract based on their desire to work together, and either can end the agreement at any time.
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