If you are going to sell your home and you want to hire a real estate broker/agent to help you, you should know what a listing or brokerage agreement is and what it should contain. A real estate brokerage contract or listing agreement is a contract between a real estate broker and a seller which covers the broker's efforts to find a buyer for the seller's real estate. It contains items such as price, terms of sale, and specific responsibilities of the broker.
There are several different kinds of listing agreements:
- Open Listing. The broker has the right to bring prospective buyers to see your home. If the buyer purchases your home, the broker gets a commission. You can give an open listing to as many brokers as you wish. However, this arrangement isn't popular with brokers, and your home won't get the same market exposure as other homes.
- Exclusive Agency Listing. The broker lists and markets your home, and gets a commission if your home sells through any broker or real estate company. You can also look for buyers on your own, in which case you won't owe the broker a commission.
- Exclusive Right to Sell Listing. With this most commonly-used listing, the broker gets a commission no matter who the buyer is, even if you find the buyer yourself.
- One-Time Show Listing. The broker can show the home to one potential buyer, listed by name, and is guaranteed a commission if the house sells to that buyer.
- Net Listing. You list your property for sale at a specified net amount to be paid to you, and you authorize the broker to retain as commission the difference between the price at which your property is sold and the specified net amount to be received by you. In some states such agreements have been prohibited in order to prevent unfair dealing on the part of the broker.
- Multiple Listing. This is an arrangement whereby individual real estate brokers in a particular area pool their exclusive listings. Your broker provides certain listing information to the local Multiple Listing Service (MLS) office, where it is coordinated with listings from other members. The listings are then published to all MLS members, any of whom may sell any listed property. If a sale of property is made by someone other than the broker who took the listing initially, the commission is divided between the listing and selling broker. Your property will probably sell faster with this kind of listing than with other kinds.
Listing Agreement Details
In addition to your name and the property address, the following items are usually found in listing agreements:
- Price and terms of sale
- Type of listing
- Length of listing time
- What personal property goes with the house
- What fixtures and appliances aren't included
- Amount of commission and when it will be paid (you should always make it payable when the transaction closes)
- Whether your home will be listed with the local MLS
- Specific responsibilities of the broker (showing, open houses, advertising and other marketing)
- Whether a lockbox will be used to show the house
- What hours and days the house is available for showing
- Under what circumstances you can take the house off the market
- Under what circumstances you can terminate the listing agreement
- How you will resolve any disputes (arbitration, mediation, small claims court)
Read every word of the listing agreement carefully, and make sure you understand everything before you sign it. Don't be afraid to ask about anything you don't understand.
Make sure your entire agreement is in writing and includes everything the broker has represented to you.
Questions for Your Attorney
- What is a listing agreement?
- If I have entered into an exclusive right to sell listing, does my real estate broker get paid if I find the buyer myself?
- With a MLS listing, will the terms for the split of the commission between the listing and selling brokers be included in my listing agreement, or can the brokers agree to other terms?