experts: real estate column Friday, May 19, 2006

Cancelling listing contracts

There is a growing incidence of brokerages that will only allow a consumer to cancel their listing contract for the payment of a fee.

By Marty Douglas

As published in REM - independent news and opinion for Canada's real estate industry.

How about a national debate about the cancellation of listing contracts? As chairman of the Vancouver Island Real Estate Board’s Standards of Practice Committee, I have had to deal with a number of consumer complaints on the issue. While I encourage all of you to individually establish the terms under which you list property, I cannot endorse those of you who are silent on the issue of cancellation if your intention is to charge a fee when a consumer wants out.

Okay. Deep breath. Take a pill. Where did that come from?

Here’s what I’m trying to get across. There is a growing incidence of brokerages that will only allow a consumer to cancel their listing contract for the payment of a fee or a referral from a subsequent listing broker. I have no problem with that approach PROVIDING IT IS IN THE CONTRACT FROM THE ONSET.

Our executive officer tells me the common legal wisdom is that when a contract is silent on the dissolution, it is up to the parties to negotiate a satisfactory severance. In other words, the consumer says, “What will it take to get your sign off my lawn?” and the broker replies.

Why aren’t the terms in the contract to begin with? How professional is it to hide your exit strategy when you know what it is in advance? How bad does it make the industry look to the public if we have our hand out for amounts of money too small to litigate?

In a recent example, a broker on Vancouver Island was very direct with the client who wanted to move on due to the broker’s less-than-satisfactory performance. He outlined not 50 but three ways to leave your lover.

1. A $300 plus GST admin fee to cover listing costs.

2. A referral from a new listing broker.

3. A conditional release with the commission payable if sold during the original listing contract. Unfortunately, none of these conditions were contained in the original listing contract.

I know we need protection from the shady seller who attempts to deal privately. I know there are people who list with the broker who suggests the highest price. I know there are sellers who will list with a broker 100 km distant because of the fee. I’ve been around. But it’s the Realtor who is the professional, not the seller.

Most sellers seek our service because we get the job done, because of their previous experience, because of referrals from other satisfied customers, because we know how to find and close buyers. Those sellers, probably 99 per cent, are happy with the negotiated fees we charge, are happy with the marketing, the speed and the convenience of our service. Most sellers know price is what you pay, value is what you get.

They will not abuse a satisfaction guarantee. So why don’t we print in our listing contracts the terms under which we will sever our relationship with the client? Why don’t we just simplify things and say something like, “Our goal is your satisfaction. If you are not satisfied with our efforts to market your property and promote your interests, we will unconditionally cancel your listing contract.”

Why not?

And as long as the listing contract belongs to the broker, not the salesperson, the final word must be the broker’s, not the so-called independent contractor. The “independent contractor” label is a marriage of convenience, a cloak of darkness, all too often pulled over an awkward situation to allow the brokers to shirk his or her responsibility. It was lent to us by Revenue Canada for tax purposes but now is a creeping pox, a plague on all our houses. If you are independent, how come I go to jail for your misdeeds?

Lou Heckler said about service: “Most people don’t act like they own their job, they act like they’re just renting it.” Laurence Summers said, “In the history of the world, no one has ever washed a rented car.” The Reverend Randall McBride said, “Success will not lower its standard to us. We must raise our standard to success.”

To finish the lesson, a little Latin scholarship from Marcus Aurelius, “Give your heart to the trade you have learned and draw refreshment from it.”

Marty Douglas is the sales manager for Coast Realty Group (Comox Valley) Ltd., one of nine Coast Realty Group offices on Vancouver Island. He is a past chair of the Real Estate Errors and Omissions Corporation of B.C., the Real Estate Council of B.C., the B.C. Real Estate Association and the Vancouver Island Real Estate Board. 1 800 715 3999; fax 250 897 3933. Email mdouglas@island.net.




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