Terminating Listing Agreements in Arizona: Five Things to Know

Though it is possible for property owners to sell real estate, most choose to work with a real estate agent who will list, market, show and eventually sell the property for them. It is the more convenient way to sell, and in return, the agent receives a commission. This typically motivates agents to sell at or above asking price, which is another reason why many sellers prefer to work with agents. Upon agreeing to work together, both parties sign a listing agreement. These contracts specify how both parties hold up their ends of the bargain, but the agreement can be terminated if either is failing to do so.

Terminating listing agreements in Arizona requires that you take several steps. Here are some things to know about the process so you can get started in the right direction.

What Is a Listing Agreement?

A listing agreement is a bilateral contract between a seller and a real estate agent that defines the obligations of each party during the process of selling property.

Per ARS § 32-2151.02(A)(1-4), this contract must be written in clear language, have a start and end date, provide a description of all relevant terms and be signed by both parties. Listing agreements in Arizona should also include cancellation provisions agreed upon by both parties.

Terminating Listing Agreements in Arizona is Possible

Though listing agreements are legally binding, they can be terminated in Arizona. This is why the seller and agent agree upon terms for cancellation before beginning their working relationship.

To cancel, the parties can either wait until the expiration date, at which time the seller can switch agents usually without penalty, or they can terminate the agreement early per the provisions in the contract. These termination provisions save sellers from being saddled with underperforming agents, but in some instances may require payment from the seller to the agent.

How Listing Agreements in Arizona Differ

The two most common types of listing agreements are exclusive agency agreements and exclusive right-to-sell agreements.

An exclusive agency agreement is between a seller and a real estate brokerage firm, so the seller can opt to work with a different agent from the firm if the original agent is not a good fit. Oftentimes, if the seller is the one who finds the buyer and the buyer has no contact with the real estate agent, no commission has to be paid.

This differs from exclusive right-to-sell agreements, in which a commission is paid to the real estate agent no matter who finds the buyer. There are other types of listing agreements as well, and each has its own set of guidelines.

The Top Reasons to Cancel Your Contract

Most exclusive listing agreements (both agency and right-to-sell) include cancellation provisions that detail how the contract can be terminated before its expiration date.

There may be a cancellation fee, but it may be worth the price if you have experienced any of the following:

• No online exposure of your property on popular sites like Zillow and Trulia, which indicates your agent has not listed your property for sale.
• Poor communication between you and your agent.
• Substandard photography that does not showcase your property in the best light.
• A personality clash that makes it difficult to work effectively with your agent.
• Unethical behavior from your agent.

These are some cases in which it would make sense to fire your real estate agent and terminate your listing agreement. However, in the end, real property law states only three surefire ways to terminate a listing agreement: death, insanity or bankruptcy of the broker or seller.

When You Cannot Terminate Your Listing Agreement

Outside of death, insanity or bankruptcy, there is no guarantee that you will be able to terminate your listing agreement. It is especially difficult to cancel if your real estate agent has delivered on marketing and property showings. You would have a stronger case if your agent was underperforming, but the agent would still not be required to let you out of your contract. Most will let you go so they can save their reputations, but other situations require an attorney.

You May Want a Real Estate Attorney

The wisest course of action when terminating a listing agreement is to start with written correspondence about your negative experiences. The agent or brokerage may simply cancel the contract to avoid further turmoil, but they may refuse. An experienced attorney can step in to review your listing agreement and can provide assistance with terminating the contract.

Find an Experienced Arizona Real Estate Attorney

MacQueen & Gottlieb has significant experience with real estate laws in Arizona. Our firm can help you navigate the termination of your listing agreement if your real estate agent has underperformed or acted unethically. Contact us today at 602-562-7218 to schedule an initial consultation or make an appointment online.