Clarifying the Holdover in a Listing

What is the “Holdover Provision” in a listing?

With this clause the seller agrees to pay commission for a certain period of time after the listing expires (the holdover period), if he sells to a buyer who was shown or introduced to the property during the listing period.

This clause also addresses a second possibility. What if the listing expires and the seller wants to list the home with a different real estate brokerage. No problem; he seller is free to relist with any other brokerage on the expiry of the listing. In this event, the seller owes the first brokerage nothing--with one exception.

The seller relists the property during the holdover period in the previous listing. What if he sells to a buyer who was shown or introduced to the property during the preceding listing period? Then the seller’s liability to the previous brokerage--and only during the holdover period--is reduced by the amount he pays under the new listing agreement.

Simply stated, the seller may owe the preceding broker any amount greater than the commission agreed to in the subsequent listing. If the commission in the preceding listing is less or the same, nothing is owed.

A Few Misinterpretations

Some salespeople believe that a seller’s liability is totally nullified once the property is relisted with another brokerage even if the buyer was introduced during the previous listing and within the holdover period. This is inaccurate.  

In one case, the buyer had submitted an offer a couple of months before that was not accepted. The listing expired and had a holdover period of 60 days. The seller relisted with another brokerage and within two weeks the same buyer submits another offer through his buyer brokerage.

The Seller questioned whether he would have to pay any commission to his first brokerage as well. The listing broker reviewed the holdover clause with the seller and clarified that the prior broker may only claim an amount that is greater than the commission agreed to in this 2nd listing. As this was not the case, no claim for any difference in commission could be made.

In another case, a seller was told once his listing expired, if he relisted and sold with another brokerage he would have to pay commission twice.

The 2nd REALTOR® corrected the inaccuracy. Once a listing expires, the seller is free to list with whomever he chooses. However if the seller sells the property to a buyer who was shown or introduced to the property within the 1st listing’s holdover period, he would be liable for any difference greater than the commission payable on the 2nd listing. Again, this was not the case and so no claim could be made.

Holdover periods are negotiable.

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