Planning to sell your house? Then chances are your agent will try to lock you into a six month listing agreement. Don't sign it, some realty specialists advise.
"Sign that and you're a captive for a whole six months -- even if the agent does a bad job marketing your home," cautions Carolyn Janik, author of "How to Sell Your Home in the '90s," a Penguin paperback.
Three months is long enough for a seller to evaluate an agent's performance, asserts Ms. Janik. If the property hasn't sold in that time and you're convinced the agent is performing well, you can always extend on a month-to-month basis, she says.
Remember a listing agreement is a legally binding contract. Most agreements keep you from backing out and re-listing with another realty firm during the term. Typically, you're also blocked from selling the property on your own during the term.
"Give the agent three months and you keep the pressure on them to keep performing for you. Why commit to six months if you can get three and know you can extend if the person is doing a good job for you?" Ms. Janik says.
Like an employee who is motivated by frequent performance evaluations from the boss, the realty agent with a relatively short contract or the need to get a contract renewed on a monthly basis may be sparked to try harder, Ms. Janik is convinced.
On the other hand, she says, a seller who's signed a straight six month contract has few levers of control over the agent's behavior.
Of course, all agents want to sell houses. Usually agents make no commission unless a home moves -- no matter how much of their own cash they've spent to advertise the property.
In reality, however, there are wide variations in the resources agents expend on their listings. You want an agent who will not only spend enough on ads, but also actively promote your home's sale through open houses and other techniques.
"You don't want to be stuck in a long-term contract with an agent who isn't performing," Ms. Janik says.
Regrettably, some agents lose interest in a listing after a few months -- especially if they have had few expressions of interest in the place, says Norman D. Flynn, a past president of the National Association of Realtors.
"Listings can go stale on people after a period of time," Mr. Flynn observes.
Still, realty experts caution against cutting the agent's term to less than three months. An agent working under a one or two month contract will be loathe to invest much time or money on a property, fearing the agreement will expire before the home is sold and the commission can be collected.
"Give the agent an honest break. As an absolute minimum, if you want good exposure for your property, you want a 90-day agreement," Mr. Flynn says.
One to two months may be enough time in a hot sellers' market, he says, but these days buyers' markets are the rule in most communities and it can take 90 days or longer to sell a home.
For the seller who want the best possible listing agreement, realty specialists offer these pointers:
* Realize that terms of the listing agreement are negotiable.
Don't be talked into signing a long-term contract on the basis that your agent says his standard contract form can't be altered. Real estate offices have their own policies, but it's rare for local laws or regulations to affect the term of a contract between home seller and agent.
In fact, even standardized listing agreement forms often have blanks to be filled in for the term of the contract and other features. A smart seller is aware of this and will seek to negotiate details of a contract rather than letting the agent dictate them, says Ms. Janik, the author.
These days -- with more homes on the market than buyers -- your power to negotiate is hardly absolute.
Insist on too short a contract, for instance, and an agent may refuse your business. Where buyers are scarce, agents have been known to decline listings they consider too much of a
gamble. Still, most agents should be willing to make a reasonable adjustment in the term of a their standard contract -- especially if your home isn't priced too high to sell.
And if you don't like one company's attitude, you can always look elsewhere.
* Consider asking for a cancellation clause in your listing agreement.
This lets you escape from your listing agreement at any point in the term if you're unhappy with the marketing of your home. A contract with a good cancellation clause (no strings attached) can be a good alternative to a three-month contract, says Patricia Savani, sales manager for Champion Realty's Annapolis office.
Champion, like some other realty chains, routinely gives sellers a cancellation clause in their listing agreements. All the seller has to get out of the listing contract is provide Champion with 24 hours notice of his intent to exit.
"It's like a prenuptual agreement. It tells you what happens if you and your agent fall out of love," Ms. Savani says.