*updated 12/3/24
Entering into a real estate agent contract is an exciting step, marking the beginning of your home buying or home selling journey. However, sometimes the relationship with your real estate agent doesn’t go as planned and you may need to cancel your contract.
Whether due to poor communication, unmet expectations or simply realizing they are not the right Realtor for you, breaking a contract with a real estate agent in Texas involves specific actions, legal considerations and often a bit of patience.
In this guide, we’ll cover everything from understanding your legal rights and reviewing the termination clauses in your contract to communicating effectively with your agent or broker and seeking professional advice.
Understanding the Basics: Listing Agreements and Realtor Contracts
Realtor contracts, such as real estate listing agreements and buyer representation agreements, are contracts that bind you and your real estate agent/broker to a specific set of responsibilities.
For sellers, this typically involves a listing contract that outlines the listing agent’s duties, such as marketing your real property, conducting home inspections, coordinating with potential buyers and handling offers.
As of August 17, 2024, buyers in Texas must sign a buyer/tenant representation agreement (sometimes called a buyer-broker agreement) with a buyers agent before the agent is authorized to show houses to the buyer. This agreement defines the agent’s role in assisting them in finding suitable properties, evaluating purchase price options and navigating closing costs.
In Texas, these contracts are binding and governed by the Texas Real Estate Commission (TREC), ensuring that agents follow ethical guidelines and standards set by Texas real estate law.
Understanding your legal right to terminate a contract and under what specific circumstances you may do so is essential.
Key Terms to Look for in Your Agreement
Here are a few key terms to know in your listing contract or buyer/tenant representation agreement:
- Termination of Contract: This clause specifies the conditions under which you can end the agreement, including any required notice of termination or other paperwork.
- Earnest Money and Option Period: For buyers, earnest money demonstrates commitment to the transaction and may be forfeited if the contract is terminated outside the option period.
- Financial Penalties and Fees: Terminating a real estate contract sometimes involves penalties or fees, especially if you don’t have a valid reason for the termination or if the agent has already invested resources into the transaction.
- Amendments: Some contracts allow amendments, meaning you may be able to alter the terms of the contract without an outright cancellation.
Understanding these clauses will help you know what options are available to you to terminate, prepare for discussions with your agent and determine the best course of action to resolve the difficulties present in your relationship with your agent.
Common Reasons for Terminating a Real Estate Contract
In Texas – as in other states like South Carolina and New York – there are a few common situations that lead to the termination of a real estate contract. Here is a quick look at some of the most common reasons for termination:
- Poor Communication: You need an agent who works for you. If your agent is unresponsive, misses phone calls or fails to update you regularly, it may be time to consider a new agent.
- Lack of Local Market Knowledge: Not every agent is familiar with your local market. Working with an agent who doesn’t know about current trends in areas like San Antonio or Austin can hinder your ability to sell or buy property effectively.
- Poor Performance or Lack of Effort: If the agent isn’t actively marketing your property or if they fail to present it in the best possible light to potential home buyers, you may have grounds for termination.
- Unethical Practices or Dual Agency Conflicts: Dual agency, where an agent represents both buyer and seller, is legal in Texas but can lead to conflicts. If a dual agent arrangement compromises your interests or if you notice your Realtor performing unethically, you may need to break your contract.
Step-by-Step Guide on How Do You Get Out of a Realtor Contract?
Terminating a contract with your Realtor requires precise attention to detail and careful planning. Follow this step-by-step guide to break your Realtor contract:
Step 1: Review Your Agreement
Begin by carefully reviewing the basic information in your real estate agent contract, particularly clauses related to termination of contract or termination of listing. Take note of any associated penalties of ending the contract, such as loss of earnest money or termination fees. It is essential to follow any steps or requirements included in the contract to initiate termination.
If you are unsure how to interpret the contract’s legal language, consider speaking with a lawyer’s assistant or licensed attorney specializing in business law or real estate law. They can help clarify complex terms, explain the legal right you have to terminate the agreement and protect your financial interests.
Step 2: Communicate with Your Realtor
Before deciding to fire your real estate agent, try reaching out to discuss your concerns. They understand your particular circumstances and a conversation about your expectations may lead to a resolution of the conflict or a mutual decision to part ways. Use professional language, cite specific clauses in the agreement and keep a record of all communications, including emails and phone calls.
If you feel uncomfortable communicating directly with your agent, contact the real estate broker or agent’s broker in the agency. Be sure to mention all specific performance issues causing contention. Many brokers will work with you to find an alternative agent within their team, or they may agree to a formal termination of buyer or seller agreement.
Step 3: Submit a Formal Termination Request:
If discussing the situation doesn’t lead to a satisfactory outcome, it is time to send a formal termination request. You can use a termination letter or fill out promulgated forms provided by the agency. Be sure to include all contact information, specify the terms under which you’re ending the agreement and mention any financial penalties that were previously agreed upon in the contract. This request should be sent to both your current agent and the agent’s broker to ensure compliance with consumer notice requirements.
What to Do If Termination Is Denied
Sometimes agents or brokers may refuse a termination request. This is frustrating, but you still have a few options. Formal dispute resolution is often the best course.
Many real estate companies offer mediation or arbitration services to resolve conflicts between agents and clients without legal action.
If you believe your agent acted unethically or that there was a breach of consumer protection law, you can file a complaint with the Texas Real Estate Commission. TREC will investigate the issue and may help resolve the dispute.
If none of these paths are effective and you still feel a need to terminate your contract, it may be necessary to seek legal action against the agent. You would need to consult a real estate attorney who specializes in criminal law or business law for cases involving real estate disputes and they will advise you on the next steps to take in your resolution.
Consequences of Early Contract Termination
Be aware, there could be repercussions to cancelling a contract depending on the terms of the agreement. Some contracts include a financial penalty for early termination, such as paying a portion of the agent’s commission or a set fee.
Additionally, earnest money may not be refunded if you terminate the contract outside the time limit of the option period. It may also have a possible negative effect on your future real estate agents or brokers.
An agent may have less desire to represent you in future transactions if you have a history of cancelling real estate contracts. They need to protect their own time and investments. It is, therefore, important to be up front with real estate agents about past terminations and the valid reasons behind them.
Finding a New Real Estate Agent
Once you have terminated your contract, you will want to avoid running into the same issues with a new agent by learning from your negative experience. When looking to hire a new agent, the most crucial step is to evaluate their credentials.
Look for agents with active broker licenses who are members of reputable organizations like the Texas Association of Realtors or the National Association of Realtors. Your new agent should understand local markets and have a positive reputation in your community. This ensures they know the best ways to market your property to potential buyers or find your ideal property.
Finally, check a Realtor or broker’s online reviews before signing another contract. Websites with high page views and satisfied customers often indicate trustworthy agents. Use verified sources, such as the TREC website and reputable agent rating sites, to ensure the agent is licensed and has a solid reputation. These tips will help you find the right real estate agent.
Bottom Line: Making the Right Decision for Your Real Estate Needs
Cancelling a real estate contract is often accompanied by frustration or confusion, but it is a significant decision that should be approached professionally after careful consideration. Be sure to understand the terms of the agreement, communicate openly with your agent or realtor, document all attempts at remediation and consider all potential outcomes.
It is possible to resolve problems if they are discussed openly with your agent or agent’s broker. When no resolution is attainable, follow the proper legal steps to terminate the a realtor contract. You don’t need to feel overwhelmed, however. Taking the necessary steps to ensure a smooth termination will allow you to move forward with confidence and find the right professional for your real estate needs.
Frequently Asked Questions
What’s the best way to fire your real estate agent?
Communicate your concerns clearly and, if issues remain unresolved, follow up with a formal termination request. Seek legal counsel if necessary.
How does a termination of listing agreement impact clients?
Terminating a listing may delay the home selling and closing process and could temporarily take your property off the market. Future agents may be less inclined to represent a client who repeatedly cancels contracts or cancels without a valid reason.
What are some red flags in a real estate agent?
Poor communication, lack of professionalism, minimal effort and absence of local market knowledge are all concerning signs in a real estate agent or broker.
Additional Resources and Expert Assistance
• Texas Real Estate Commission: Use TREC’s official website for filing complaints and understanding real estate regulations.
• Texas Association of Realtors: Resources and guidance on working with licensed real estate professionals.
• Legal Assistance: Seek guidance from a licensed attorney or verified Lawyer’s Assistant to help navigate complex contract terminations. You can begin your search with reputable sites like Google Reviews or FindLaw.
** About the Author: Hilary Schultz is a licensed Texas Realtor and real estate professional — is a leading authority on DFW metroplex real estate. Hilary is a member of the executive board of her local Texas PTA and active member of the Texas community. Along with her husband Patrick, they have combined 40 years of experience with over 2700 real estate transactions completed. Read our online reviews to see our passion to help the Texas community and provide homeowners with valuable insights, guidance, and a personalized experience through the home selling process. Let us serve you and help to navigate the housing market on your real estate journey.
*** Disclaimer: The information provided in this article is for general informational purposes only and should not be considered legal advice. Every real estate transaction is unique, and the process of terminating a contract with a real estate agent may vary depending on your specific circumstances. It is always in your best interest to consult with a qualified real estate lawyer to ensure that you are taking the necessary steps to protect your rights and interests under Texas law. While we strive to provide the best possible experience and information, we cannot guarantee specific results or outcomes. By using this website, you agree to our use of cookies and our privacy policy regarding personal info.