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When two people enter into a real estate contract they agree to perform according to the expectations stated in the contract. Each person will probably be planning for their future and the outcome of this contract will play a large part in determining which choices they make. That is why contracts are legally binding to both parties, and each is expected to live up to the terms stated in the contract. It is also why there are legal means to address what happens when the contract is broken.

In real estate there are two types of contracts that are dealt with most frequently: listing contracts and selling contracts.

LISTING CONTRACTS

1. To be enforceable, the contract must be in writing.
2. The contract must have an expiration date specified.
3. A listing contract actually represents an employment contract between the agent
and the seller, who is agreeing to employ the agent for a specific job for a
specific length of time.
4. A listing contract can be terminated by either party, but there are consequences.

Generally, if the seller chooses to terminate the contract, any buyers who viewed
the property while it was listed with the agent are considered to have been procured
by that agent, since he had made the property available for sale. There is a time
limit on this, usually two to four weeks after the original listing contract has
been void. In this case, the listing agent would still receive part of the commission
from the sale.

When the agent is the party who requests release from the contract, the contract is
then void, and the seller is free to choose another agent.

Listing contracts frequently expire and are then negotiated with another agent, for various reasons. Many sellers feel that a new perspective on the property would be helpful, some feel their agent did not do all that was stated in the contract, some are just frustrated and want to go in another direction. The agent may choose to not renew an expired contract because the seller is difficult to work with, they have obvious differences in how to approach the sale, or the seller has not lived up to agreements made in the original contract. It happens. Both parties move on.

SELLING CONTRACTS

1. To be enforceable, the contract must be in writing.
2. The specific performance of each party must be spelled out in the contract so that
each will know what to expect from the other.
3. The conditions of the contract are considered "contingency clauses", meaning that
each party's rights depend on a particular event

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