selling agent terms

[Daniel Levine]

I recently flipped a house in New York. The selling agent wants 9 months exclusive terms with 6% brokerage fees. I am concerned with the 9 months exclusive terms and want to change this to 3 months. What is a typical term for a selling agent? My thoughts are if she can't sell it in 3 months I need someone else, and if we only give her 3 months she will be more motivated to work on it. Let me know your thoughts. Thanks.

[Bill Gulley]

Really depends on the market, but 9 months I'd think would be laughable. 6 month listings are customary. Look at the average days on the market and give her a month beyond that. 6 months should more than cover it.

3 months is not long enough in my opinion. That gives about 6 weeks to advertise. You may negotiate a week. Then the buyer has to qualify for financing, that can run from 3 to 6 weeks depending on the loan. What is the time period for appraisals there? Are any repairs needed? Allow time for that. Are you sure title is clean and ready to close? You could be bumping the closing date at 3 months.

You're basically asking her to advertise the property and lock in one buyer and work that buyer. She will have a protected period for any buyers showing up after the listing expires, if any, but no one will be showing the property after you go under contract and no one will be looking after it expires.

I don't know the marketing time expected at the price you're asking, but if your price is too high, you can kill a property for 3 months just exposing it a price that is too high. Knowing that investors usually try for the highest price they can get, you're probably pushing it.

Your price might be why she asked for 9 months, she may know it's too high and will need to drop to get it sold. Many agents will simply take a listing to get on the board and go with the flow later as needed.

Need to price it right, you have holding costs and she has advertising costs and other expenses as well.

6 months 6%, that is customary. I would never have taken a 3 month listing. :)