All listing agents will require you to sign an agreement with them before listing your home. Buyer agents will also ask you to sign an agreement before they show you homes or before you place an offer on a home. While there are many essential things to pay attention to in these agreements, there is one section that most consumers do not put much thought into that can cause significant headaches down the road. That critical section is the length of the contract.
Before we dive into lengths, you need to know that the agreement you sign is typically not with your agent but instead with the broker (where your agent works or who they work under). Remember this, as it will come up later!
There is no standard set of time for these agreements. We have seen agents present agreements to their clients ranging from 60-days up to 1- year. In our opinion, you should not be signing contracts for more than 60 days when you first start working with an agent.
There are two million real estate agents in the United States to sell six million homes. While that may sound like you have a lot of options to choose from, you need to know that some agents are amazing, some are ok, and some are not so great. Even with the plethora of platforms telling you that they will pair you with the "best agent" (which is based on who pays the most for your information), the truth is that you have no idea what type of agent you have until you start working with them.
If your agent turns out to be a great match for you, it takes little effort to sign a new agreement and extend your time with them.
But if you get 30 days into your one-year agreement with your agent and realize that they are not a fit, your agent will have to get the broker to approve you voiding the agreement. Sometimes they will let you walk away. But most of the time, something else happens.
Remember that the broker takes a percentage of what your agent earns, so you walking away means they lose money, which they don't want to happen. So, instead of letting you walk away, they will likely offer to pair you with a different agent (that works within the same office). Instead of starting on a clean slate with an agent of your choice, you will get little say into who you work with next.
Just be honest with your agent. Be optimistic about your future relationship, but explain that you want to make sure you work well together before committing to anything long-term (this sounds like dating, doesn't it?). You can say something simple like...
I am excited to work with you, but I want to start with a small length of time to ensure we are a good fit. I will be happy to extend it if things go well.
This is your hard-earned equity or savings, and you have every right to protect it and yourself throughout this process.