What Happens When A Real Estate Listing Agreement Expires?

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When you decide to list your home with a real estate agent, you’ll sign a legally binding contract called a listing agreement that allows your agent to market and sell your property until the real estate listing agreement expires.

In return for managing the transaction, you’ll pay your agent a real estate commission from the proceeds of the sale. But what happens if the listing agreement expires before your house gets sold?

We reached out to two top real estate agents, Brian Fitzpatrick from Waltham, Massachusetts, and Andrew Poe from Knoxville, Tennessee to find out common reasons that a listing agreement might expire and what sellers need to know before moving forward with their home sale after it does.

Types of listing agreements

A listing agreement sets the wheels in motion for your home sale. The National Association of Realtors® defines the three most common types of listing agreements.

  • Exclusive right to sell listing: The most common type of listing agreement that grants an agent exclusive rights to sell your home. You cannot sell your home on your own.
  • Exclusively agency listing: You agree that one agent or brokerage can sell your  home, however, you can find a buyer.
  • Open listing: Any agent can sell your home. Whoever finds the buyer receives the commission, and you have the right to find a buyer on your own.

Some real estate professionals may be reluctant to agree to exclusive agency or open listings since all their hard work will be done in vain.

How long are most listing agreements?

The length of a listing agreement is decided by the agent and the seller, although most agents have a standard contract they present to clients. Six months is the average timeframe for most contracts, however, some contracts can go up to a year.

Poe’s brokerage uses 180-day contracts (six months) for its clients. Fitzpatrick, on the other hand, prefers 120-day contracts (four months).

Like most contracts, the seller has the right to request a shorter or longer time period if both parties agree. However, once the listing agreement is set — and the contract is signed — a seller cannot back out of the contract or there could be serious and costly repercussions.

Connect with a Top Agent

According to HomeLight data, top agents are more likely to sell homes faster and for more money than average agents.

Common reasons why real estate listing agreements expire

Poe says he’s only witnessed four to five listing agreements expire in the six years he’s been with his brokerage. “If a listing expires, we haven’t done our job,” says Poe.

Fitzpatrick agrees that “it’s a rare occurrence when a listing agreement expires [before a house sells] but says it does happen occasionally.”

If your listing agreement is set to expire, it could be due to the following common reasons:

The listing price is too high

If you or your agent listed your house above the fair market value, that could likely have driven buyers away. Any top agent knows how to price a home competitively by performing a comparative market analysis based on the prices of homes with similar features sold in the area.

If you’re working with an inexperienced agent or you disregarded your agent’s recommended listing price, it could cause your home to spend more days on the market.

Top agents regularly update sellers on market fluctuations and comparable sales. If a home sits on the market with low activity, they know they need to pivot their pricing strategy.

Lack of communication

Another reason for an expired listing agreement could be poor communication between the agent and the seller. For example, if your agent receives buyer feedback that they can’t get past the “garish color of your walls,” they should inform you ASAP and recommend a few neutral paint colors.

“Even if an offer doesn’t come in, there is almost always something we can act on or improve upon based on the buyer’s feedback,” Poe explains. “The key is to have continual conversations.”

Lackluster photography and staging

When a home is cluttered with the seller’s personal belongings or the listing photos appear too dark or unattractive, it can dissuade buyers from scheduling showings and eventually cause the listing to expire. You can make a home appear inviting and appealing to buyers by taking professional photos and staging the home.

“Professional photography is an essential part of properly marketing a home and presenting it in its best possible light,” says Poe.

With so many homebuyers making decisions based on online listings, shooting high-quality photos and videos is vital when marketing your home online.

“If your agent used terrible cell phone photography or really bad lighting, your home may have had a poor online presentation.”

Statistica collected data of U.S. homebuyers who searched for houses online in 2021, finding that the vast majority of buyers used online tools to help them find their homes.

How staging helps a home sell faster

Statistics from the 2021 Profile of Home Staging by the National Association of Realtors® research group show the positive impact staging has on buyers.

  • 47% of buyers’ agents reported that staging influenced how buyers viewed homes.
  • 82% of agents said staging helped a buyer visualize a property as their future home
  • 46% of real estate agents said staging the living room is important for buyers followed by the primary bedroom (43%) and the kitchen (35%). 
  • 23% of sellers’ agents cited 1% to 5% increases in buyer offers compared to similar homes

Factors outside your control

Sometimes a property can come with its own extenuating circumstances that can make it tougher to sell. The following scenarios illustrate situations beyond a seller’s control:

If you’re facing any of these challenges, the solution comes down to lowering the price. If your listing is about to expire and you’re motivated to sell, you might be able to offset an undesirable quality by sacrificing a little off the price.

“If all the other boxes are checked — staging, repairs, improvements, marketing — it’s reduced to a pricing situation,” Poe explains. “If the seller is looking at comparable sales and expects to get the same price, I would explain that those other homes don’t have the same limiting factors.”

What are your options after a real estate listing agreement expires?

If your listing contract expires and you choose not to renew, your agent will remove your property listing from the MLS which conceals your property from buyers. This also ends your obligation to your agent. If you still wish to find a buyer, you can take the following routes to sell your property.

Extend the agreement or draft a new one with your agent

Do you feel confident that your agent can help you find a buyer? Then consider renewing the listing agreement for an agreed-upon term. Meet with your agent and discuss any changes you’d like to make such as revisiting your marketing and pricing strategies or doing repairs or improvements that failed the inspection and caused buyers to walk away.

Sign with a new agent

If you were unhappy with your agent and feel they’re not the best fit to sell your home, consider working with a new agent if the current one:

  • Exhibited poor communication
  • Let you call the shots without giving advice
  • Couldn’t handle the pressure
  • Dropped the ball during negotiations
  • Acted unethically and didn’t have your best interests in mind

Don’t risk working with a bad agent the second time around. Make sure to choose a professional based on their sales history, good reviews, and a proven track record of success. To find a top agent, input your home address into HomeLight’s Agent Finder, and we’ll match you with three top agents who have successfully sold similar properties in your area.

Sell “For Sale By Owner”

If your listing expired because your agent couldn’t sell your home, you might feel tempted to list your home “For Sale By Owner” (FSBO). Before you head down that path, know the data from the National Association of Realtors® 2021 Profile of Home Buyers and Sellers:

  • Only 7% of recent home sales were FSBO sales
  • FSBO homes sold at a median price of $260,000; agent-assisted homes sold for $318,000 on average
  • 57% of FSBO sellers knew the buyer

Get a cash offer on your home

If your listing agreement expired, and a root canal sounds more appealing than starting the home selling process all over again, consider selling your house for cash. With a cash offer, you can sell your home to an iBuyer, a house flipper, or a buy-and-hold investor for a quick and painless sale.

“When selling to a cash buyer or iBuyer, there are fewer closing costs involved, so the hypothetical net proceeds may end up being more favorable than you expect,” explains Poe.

Listing Agreement Expired?

If you’re overwhelmed at the thought of re-listing your home with another agent, you do have options. Sell when you’re ready without the hassle of paying for repairs, prepping for listing, or dealing with showings. Get started with HomeLight’s Simple Sale platform today.

Expired vs. withdrawn listings: how are they different?

At first glance, expired listings and withdrawn listings might appear the same. Both listings are inactive on the MLS and on real estate websites. However, there are distinct differences between the two.

An expired listing cuts the ties between a seller and an agent. On the other hand, a withdrawn listing remains under contract but the agent removes the listing from the MLS on behalf of the seller’s request. A few reasons sellers might want to remove their property listings include:

  • Revisiting their marketing and pricing strategy
  • Deciding to do some major fixes or upgrades before putting their home back on the market.
  • Going through personal issues such as a divorce or death in the family

Since the contract between the agent and seller remains valid, the owner cannot work with another agent until the listing agreement expires. At that time, the seller has the right to relist the property with the same agent or find a new agent or brokerage to represent them. In either case, a new listing will need to be created on the MLS.

How long after a real estate listing expires can an owner sell privately?

Typically an owner can sell a home after the protection clause period has passed which is usually 90 days after the contract has expired. A protection clause, sometimes called a safety clause, protects the agent from the house being sold to a buyer to whom the agent introduced the property to.

“If I take a buyer into a home, and then the listing expires, and the seller opts not to re-list, but the buyer comes back and buys that home soon after, I would have a right to that commission,” Poe explains.

But if you sold the home to someone you know, for example, if your childhood friend toured the house with your agent, the protection clause wouldn’t apply. You’d be free to sell your friend your home after the listing agreement expires.

Header Image Source: (Roger Starnes Sr / Unsplash)