Getting out of your contract with your buying realtor

When you buy a home, and ask a realtor to represent you, you sign an agreement with your realtor. What if you want to get out of your contract? And can you get out of your contract with your realtor?

The short answer is yes, you can. However, it can be complicated. First a warning; never just walk away unless the buying agreement with your realtor was ended by date. If you walk away and purchase a home while the contract is still valid, you may be on the hook for the agreed commissions.

Reasons buyers want out of their real estate contract

The most heard complaints about realtors are probably lack of communication from the realtor, and not being available for showings in a ‘timely matter’. Also, some people realize during the process that their chosen realtor is inexperienced, lacks certain knowledge, or they feel their realtor works more for his or her own interests. And it is clear that the pushy agent is no one’s favourite.

Why sign a buyer’s agreement with a realtor?

These buyer’s service agreements were always in existence, but were made mandatory in 2014 by RECA, the Real Estate Council of Alberta, who works for the public. This agreement clarifies your relationship, it outlines the mandatory duties of a realtor towards the client, and it clearly outlines commissions. Correct practice is to have the agreement in place when a buyer starts viewing properties with a realtor. This is usually the point in time where a realtor starts to owe the buyer fiduciary duties, must work in the best interest of the buyer, and both parties settle a trust.

A buying agreement lays out several things, of which 4 important ones are:

• The responsibilities from the realtor to you, the buyer.
• Your responsibilities toward the realtor.
• The commission you agree upon when you buy a home during this agreement.
• A beginning date and end date.

These fundamental points must be understood by the buyer. A good realtor will sit down with you to go over this agreement to explain it. Or, at least, as a buyer you must get the opportunity to read the agreement carefully and ask questions if there is something you don’t understand. Because once you sign it, there is an agreement in place between you and your realtor.

Realtors’ responsibilities written in service agreement

What are the responsibilities from the brokerage and the agent? The agreement you sign states something in the line of:

During this agreement we must:

• be impartial in our dealings with you and other sellers represented by us in whose property you are interested.
• make sure the designated agent that represents you meets our applicable policies and procedures.
• supervise the designated agent and support staff to make sure their responsibilities are met.
• hold money we receive in trust, in accordance with the Real Estate Ac.
• give you a copy of this agreement as soon as possible after signing.
• Follow through with our responsibilities in a timely manner.
• look for properties that match your search criteria, until you buy a property under this agreement, or this agreement ends.
• keep you informed during the search and any resulting transaction.
• tell the seller of a property you are interested in that they are your agent.
• take reasonable steps to find and give you information about properties and transactions you are interested in.
• help you prepare an offer and negotiate favourable terms and conditions with a seller.
• help you to comply with a contract to buy the property.
• present all offers and counter-offers to and from you, even when the property is already the subject of an accepted offer.

Ways to ‘get out’ of your buyer’s agreement with your realtor

Technically, as a buyer you can ‘fire’ your agent if your agent does not comply with any of these mentioned responsibilities in this agreement.

However, as mentioned earlier, you cannot just walk away, or you may end up paying two commissions. So, any of your concerns must first be discussed with your realtor. If you have clear evidence that your agent was not honest, it will be easier to get out. If you feel your agent doesn’t communicate well, it must be discussed. These talks are never nice, and you can ask the broker to get involved to mediate.

And, in all fairness, sometimes a good chat with your agent can clear up things. Sometimes there are misunderstandings that can be easily cleared up with one discussion. Buying a home is a complex process, and many things go on behind the scenes. If the agent doesn’t explain things clearly, or perhaps not at all, a buyer can feel that things are not right. Also, many communications these days go via WhatsApp, text messages and email. Here, things can easily be misunderstood.

If the realtor isn’t communicating well, or is not available in time for viewing homes, again, you will have to address these issues first. Also, if you feel, during the buying process, that your realtor doesn’t have the experience or knowledge you expected, you should discuss this first. It is understandable that expressing your concerns often sets a tone in your relationship that damages the relationship to both parties. And so be it, if you want out.

Ending the contract with your buying realtor

In regard to ending the agreement, the services agreement states something in the line of the following:

Despite the end date listed at the beginning of this agreement, the agreement ends immediately if any of these things happen:

• you complete a purchase of a property matching the search criteria.
• we and you agree in writing to an earlier end date.
• our license to trade in real estate is suspended or cancelled.
• we are bankrupt, insolvent, or we are in receivership.
• you give us written notice to end this agreement because our board membership status changes to the extent that we cannot fulfill our obligations under this agreement.
• you materially breach this agreement and we give you written notice to end it, or we materially breach this agreement and you give us written notice to end it.

If the agreement ends for any of these reasons, our rights and your rights under this agreement will not be affected.

As mentioned before, if the realtor breaches this agreement in any way, you still have to bring the issues up and discuss them first, and perhaps involve the broker, in order to get out.

Get your termination in writing

If both you and the realtor agree to end the relationship and end the agreement, make sure you have this termination in writing. There are special forms available that both parties need to sign. And if in doubt, seek legal counsel.

No buying agreement in place is a red flag

As mentioned earlier, this service agreement is mandatory as of 2014. It outlines fiduciary duties, commissions, it settles trust and it may avoid any surprises afterwards. Today, there are still many realtors who work without a buying agreement in place, when it should be. Instead, they let the buyer sign this document only at the minute of writing an actual offer on the home. But when you start working with a realtor, it is a red flag if a realtor doesn’t let you sign this mandatory agreement.

Remember, it is mandatory as of July 2014 to have a buyer’s agreement in place. So, a realtor who doesn’t deem it necessary to have an agreement in place at the time it should be in place is not obeying the law. And secondly, because realtors work 100% on commission only, a realtor’s commitment can change to help you in your best interests. If there is no agreement in place, a buyer can just go out with any of the 5000+ agents. If that is the case, an agent will want you to buy a home as soon as possible. So, the part “working in the best interests of the buyer”, can easily shift to ”working in the best interests of the realtor”.

Still, we realize that some people are hesitant to sign such a contract. Buyers may express the concern that they are ‘locked in’. This concern is a red flag in itself. In that case discuss your concerns first, before signing. If you are worried that your realtor is inexperienced discuss this. There are many questions to ask to put you at ease. But ultimately, signing an agreement gives you the best protection and commitment from a realtor.

 

How we work…

We fully understand the concerns of buyers to sign an agreement. It may feel like getting married on a first date. Who does that? Luckily, we are able to work with mainly referrals, which nearly eliminates any concerns about trust issues. However, referred or not, we never let buyers sign on our first tour of viewing homes. This way, buyers get the opportunity to learn how we operate and get to know us, and trust us, before committing to us.

We started working with buyer agreements quickly after we we started in real estate in 2009. We realized the value of these agreements for both parties. Because, as realtors, we must be available to our clients 7 days a week, making it important for us to dedicate our time wisely. Viewing homes can take weeks, months and sometimes even years. So, knowing that buyers commit to us makes it possible for us to commit to buyers, every single day of the week. Because who feels dedicated to working for someone if you don’t know if you get paid at the end of the day? Having an agreement in place makes us committed and able to work in the best interest of the buyer.

Added to that, we don’t ask for a retainer fee either. If buyers decide not to buy a home after ‘shopping’ for homes, there is no ‘debt’ for the buyer as owing to us. And if a buyer does buy a home, which is usually the case, this agreement makes sure that we get paid by the seller’s brokerage.

 

Please note: The above is general information and not considered legal advice. We do our best to write informative articles about real estate in Calgary, Alberta. If you have any questions or concerns about our comments, please feel free to contact us or speak to your legal advisor.