Sep. 1, 2006: An escape clause in real estate employment contracts would help everyone

Believe it or not, this can be a rabble-rousing column.

Sometimes I write about the perils of dual agency or why the buyer is actually paying for everything in a real estate transaction or why buyers as well as sellers should negotiate their agent's compensation. While these ideas might seem simple and obvious to you, in fact they are hugely controversial within the real estate industry.

When I write a column like that, my day will be punctuated by testy calls from angry Realtors and brokers.

Oh, well.

The slim justification for our real estate licenses, and the earning power accruing thereto, is service in the public's interest.

Too much of "the way things have always been done" in real estate strikes me as being of great benefit to the brokers and the agents, but of no benefit - or even of actual harm - to buyers and sellers.

Here's another one, sure to make the phone lines light up:

There should be a firing clause in every employment agreement.

Brokers want employment agreements because we work "on spec." That is, we don't get paid until we produce the agreed-upon results.

That's a good thing. It keeps Realtors motivated.

But an exclusive employment agreement with no exit clause traps unhappy buyers and sellers with an agent who may not be producing any results or who simply may not be a good fit personally.

This is language that will suffice:

"This agreement will be terminated upon written notice by either party."

With this clause, the broker can fire the clients, too, if that seems wise. But the important point is that clients can get out of an unhappy situation if they feel this is necessary.

Their goal, as buyers or sellers, is to achieve their real estate objectives. Buyers and sellers are not buying and selling real estate for the benefit of Realtors or brokers.

Giving consumers the power to escape an employment agreement when things just aren't working out is the best service of their interests.


Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.

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