A listing agreement on a Long Island property expires in five days. The seller has just received an offer with a proposed closing date 45 days out. Before the seller responds to the offer, what should the listing agent advise?
Correct Answer
A) Extend the listing agreement in writing to cover the full transaction period before the seller responds to the offer
While many standard listing agreements contain a 'protection period' or 'override clause' that preserves commission rights for transactions with buyers introduced during the listing term, that clause typically applies only if no new listing agreement is in place. More importantly, the agent's authority to act on the seller's behalf — including negotiating terms, preparing counteroffers, and managing the transaction through closing — derives from the listing agreement itself. If the agreement expires mid-transaction, the agent loses clear contractual authorization to continue representing the seller. Extending the agreement in writing before the seller responds eliminates ambiguity about the agent's authority and commission entitlement for the entire closing process, which is the professionally and legally sound course of action.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created by a clear, explicit agreement between the principal and agent, either orally or in writing.
The highest legal obligation of trust and confidence owed by an agent to their principal, requiring the agent to act solely in the principal's best interest.
An agency relationship where the agent agrees to act on behalf of the principal without receiving compensation.
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