Expired Listing: Can I Sell My House?
Sometimes, it happens that in spite of your listing agent's best efforts, your house may find a tough time in the market and fail to sell. A buyer's market is notorious for letting real estate listings lapse into its expiration date, as buyers have plenty of options to choose from, so it can be extra challenging to get a home sold.
With the house currently sitting unsold off market, you're on the hook for mortgage payments and its upkeep; or, if it's in already a bad condition, it might get progressively worse and may be teetering at the edge of being condemned.
In any case, what now?
In this guide, we'll walk you through the options available to you when your listing agreement expires so you can make an informed decision.
What Is a Real Estate Listing Agreement?
When you enlist the services of a real estate agent to sell your home, you sign a listing contract with them. The contract sets forth the duties and responsibilities of both the homeowner and the real estate agent.
For example, the agent will be responsible for the following:
- putting a yard sign and a lockbox on the property
- staging the property for the home sale
- taking photos and videos, or hiring professional photography services for a virtual walkthrough of the property
- putting the property on the Multiple Listing Service (MLS) and posting it online through various websites and social media
- devise a marketing strategy for the home and conduct open houses to get to as many interested buyers as possible
On the other hand, as the owner, you must ensure the following:
- the house is in good working condition
- all personal items stowed away in boxes placed in the garage, or in a storage unit so staging the home would be easier
- allow access to the property at all times for open houses and showings
If the property in question is jointly-owned, such as in case of spouses and siblings co-owning the home, all owners must sign off on the listing agreement. Ownership disputes can prevent you from signing the closing paperwork so make sure everything is settled first before putting your home on the market.
What are the Types of Listing Agreements?
According to the National Association of Realtors, there are three main types of real estate listing agreements, depending on how much control you'd like to have over the selling process.
Exclusive Rights to Sell Agreement
In this type of listing agreement, you turn over any and all the rights of selling your home to a real estate broker or agency. This means they have the sole right to show the home and list it for sale, and they will act as your official representative in the real estate transaction for the time period .
Consequently, even if potential buyers approach you directly, you will have to direct them to the real estate agents handling the sale on your behalf.
An open listing means exactly that: a home is listed for everyone to view. This usually happens if the house is For Sale by Owner, or FSBO, where you, the seller. is in control of the whole process.
If a real estate agent brings you a buyer, they are entitled to a commission of up to 3%. But if you sell directly to a buyer, financed or otherwise, no commissions need to be paid.
Exclusive Agency Listing Agreement
However, if you don't feel confident enough about your own sales and negotiation skills to go full-on FSBO, you can instead opt for an exclusive agency listing agreement.
This contract strikes a nice balance between the previous two agreements outlined above.
This gives you all the benefits of an agent-assisted sale such as better marketing which results in increased traffic to your property and therefore greater chance of selling your home sooner (and for more money!), but doesn't completely discount your efforts in case you get the home sold on your own.
Do I Still Need to Pay a Commission to a Real Estate Agent if My Listing Expires?
Normally, the listing contract expires within 3 to 6 months. However, that doesn't automatically mean you're no longer legally obligated to pay once the listing expired.
It all depends on the commission protection clause included in the contract with your previous agent.
This commission safety clause can cover anywhere between 30 to 90 days after the real estate agreement expires, so even if you have signed on with a new agent or sold the property yourself, you will have to pay their commission as their initial efforts may have contributed to the success of the home sale.
To avoid future complications, read through and understand the listing agreement carefully before signing on the dotted line.
Is It Required to Sign a Real Estate Agreement Before Selling My House?
Depending on how you want to sell your home, you may or may not be required to sign a real estate agreement.
If you're opting for a traditional sale via FSBO , a real estate agreement is not required. The same goes if you're selling directly to a cash buyer.
On the other hand, while there is no upfront contract for an open listing, once an agent brings in a buyer, a contract usually follows to ensure they get paid for a sale they helped facilitate.
Expired Listings: What Are My Options?
When your house doesn't sell within the listing period, you must first sit down with your real estate agent and find out why it happened.
Doing so would help you decide which option to go with moving forward.
Renew the Real Estate Listing Agreement
When your real estate listing expires and you can see that your agent did everything they could--it's just that you're both helpless against the market forces at work--then you can renew your contract with your current agent.
However, it would help if you'd do a couple of things differently such as lowering the listing price, or perhaps boosting your curb appeal by giving your façade a power wash to attract more people and get good buyer offers.
Find a New Real Estate Agent and Make a New Listing Agreement
You might feel that signing with a new agent is the way to go, and once your real estate agreement expires, you're free to do so. Just be sure to check the safety clause written into the previous contract, or else you might be liable to pay commissions twice.
Sell Your Home Through FSBO
If you're over working with real estate agents and want to avoid paying commissions, you can take the reins for sale by owner over the whole process by selling it yourself. Granted you'll do much of the legwork, but when the property sells, most of the profits go to your pocket.
Sell Your Home Directly to a Cash Buyer
Instead of a real estate listing, you can keep your house off market and find cash buyers such as investors, house flippers, or cash home buying companies.
When you get a cash offer from these buyers, the sale is quick and pretty much guaranteed, no waiting around for loan approvals and lender-required inspection, which may sometimes cause the deal to fall through if the house is in bad shape.
The only drawback in working with cash buyers is selling for a price lower than the market value, but with the time, energy, and realtor fees saved, getting cash for it now might be better for you.
Take It off the Market and Rent It Out Instead
Finally, you might decide to wait out the prevailing unfavorable market and wait for the tide to shift.
For some cash flow, you can take on tenants in the meantime. Additionally, your property might appreciate so you end up selling for a higher price in the future.
Closing Thoughts: How to Sell Your Home After the Listing Expires
When a listing agreement expires, it is not a cause for panic. Understand that your inability to sell within the time frame may be due to larger forces such as market conditions, and not necessarily because of a failure in marketing.
If you're looking for a sure buyer, you can work with us at House Buyer Network! All we need from you is your property address, email, and phone number, and afterwards we'll help match you with local cash buyers familiar with your area so you get the best offer for your home.
Interested? Fill out our form below to get started!
Call us at (855) 835-2544 if you have any questions. we'd love to talk to you!