2015 Listing Presentations – The “Automatic Extension If Price Reduced” Clause
There is nothing wrong with taking a listing that is overpriced, if given time, you’re confident you can get the seller to be more realistic and lower the price. But, if you agree to take an overpriced listing, you must be prepared to deal with a seller that may allow you to spend time and money marketing their property until the listing expires, and then they decide to give the property to another agent at a lower, more competitive price. This has probably happened to most listing agents. All that time and money goes down the drain, while the next agent has the opportunity to quickly sell the listing because it’s finally priced correctly.
When a seller employs the above strategy, they aren’t intentionally planning on sticking it to the first agent that listed the property. In most cases, the seller has recognized that their strategy hasn’t worked, and decides to change the strategy by both reducing the price and changing the agent. Why not address the risk of this happening at the most advantageous time, or when the listing is initially signed.
To avoid the outcome discussed above, consider using terminology similar to what is listed below:
“Seller agrees to give the listing to agent at the lowest price it will be offered for sale during the listing period, and for a period of 90 days after the expiration of the listing. Therefore, if seller lowers the price at any time during the listing period, or at any time within 90 days after expiration of the listing, seller agrees to give the agent an opportunity to market the property at the lower price, by extending the listing agreement for an additional 90 days from the time the price is lowered”
When a seller agrees to the above clause, they are merely being fair to the original agent. Be sure to discuss this clause with your broker and/or attorney to be sure you are using the proper wording. In most cases, the clause will ensure that another agent doesn’t reap the benefits of all of your hard work.