Question: We listed our home in Gilbert for $280,000 after our listing broker told us that $280,000 would be a fair price. Within three days we had seven offers on the home, including two offers for more than $280,000. We were confused and upset, so we refused all of the offers. We no longer trust our listing broker, and we want to cancel our listing agreement.
Our listing broker is angry because we rejected all of these offers, and says that, although we did not have to accept any of the offers, we still owe a listing commission of 7 percent under the listing agreement because our listing broker produced a “ready, willing and able buyer.” Will we have to pay our listing broker a 7 percent listing commission even if we didn’t accept any of the offers? Can we cancel the listing agreement?
Answer: First, before entering into a listing agreement, you should have asked you listing broker to do a broker price opinion for you to review. A BPO shows comparable sales of homes in the area, and this BPO should have helped you determine a list price for your home. Second, a listing agreement is a contract like any other contract. In other words, neither you nor the listing broker can cancel the listing agreement without cause. However, if the listing broker deliberately misrepresented to you the value of your home in order to get a quick sale, you should have the right to cancel the listing agreement. Third, in regard to your listing broker producing a “ready, willing and able buyer,” your listing broker would be entitled to the listing commission under the listing agreement for any offers equal to or greater than the $280,000 list price only if thee were no material contingencies in any of the offers. Examples of material contingencies are financing and a home inspection.
Inasmuch as most offers contain one or more material contingencies, your listing broker has probably not presented an offer from a “ready, willing and able buyer”; thus, you probably do not owe your listing broker a commission.