Why does the seller decide to terminate the contract with the realtor?

When buying or selling real estate, many families outsource the entire procedure to real estate agents by entering into a real estate brokerage (CMI) contract. In some cases, everything goes smoothly and the deal closes successfully. But there are other cases where the buyer or seller decides to terminate the contract early. Why is this happening? What are the main reasons behind the termination of CMI in Portugal? There is no consolidated information in Portugal that can answer these questions and help professionals in improving their efficiency and confidence in the sector, warns Massimo Forte, consultant, trainer, real estate specialist in this article prepared for idealista/news.

The real estate intermediation in Portugal is mainly based on the service of representation in the promotion and advertising of real estate in order to attract interested parties to purchase it. And it all has to be legally formalized through a real estate mediation agreement (CMI)," explains the specialist.

It is also important to assess the perception of the buyer or seller throughout the process.

In other words, it's important to consider the client's feedback regarding the real estate agent's performance, whether it's after the transaction goal is achieved (usually at the conclusion of a purchase agreement), or when the client decides not to renew or terminates the CMI early, preventing the transaction goal from being achieved, the trainer and real estate expert points out.

Finally, many real estate agents ask the client questions about what their experience was like buying or selling the property. And they also bother to ask why the client decided to terminate the CMI. However, Massimo Forte warns that "many clients will not state the real reason for their dissatisfaction with the services provided under the contract".

There is a lack of data on the reasons for CM termination in the Portuguese real estate market, he believes. And how do you get that data?

Discovering the lack of information in the Italian market on the termination of real estate brokerage contracts, the Italian Federation of Professional Real Estate Agents (FIAIP) conducted a national study on the reasons why owners/sellers decide or may terminate CMI. This study is conducted quarterly and aims to examine trends and assess developments.

In their analysis, FIAIP divided Italy into seven large zones because they believe that people's behavior varies from zone to zone. And here are the main reasons for the termination of real estate brokerage contracts in the northern zone of Italy, relating to the second quarter of 2023, as told by an expert:

• Evaluation of the offer price: in about half of the cases, the agent offers prices lower than those agreed in the CMI. And 20% of these terminations also occur because the client expected to receive offers at a higher price than was offered at CMI (an expectation often created by the agent). Owners choose to terminate the contract and wait for better days to put the property back on the market at a higher price;
• Quality of service: in this case, the majority of respondents terminate the contract due to lack of offers and follow-up from their agent, while 14% terminate the contract because they feel that although the agent is providing quality service, they have been in exclusivity with CMI for too long without results.
• Mortgage credit access: difficulties in obtaining credit solutions for interested buyers lead to termination by 30% of those surveyed, believing that financial qualification is not properly conducted by the estate agent, or because their agent does not have a reliable credit intermediary with whom they work.

Data confirms empirically what is often knowledge in practice. "Nevertheless, the availability of this data makes it possible to observe a constant dynamic, which I consider extremely useful for agents and professional intermediaries who seek to improve their work and develop new strategies of action," says Massimo Forte.