A listing agreement is a contract between a home or property seller, and a real estate broker. The agreement is a set of conditions that allow the listing agent within a certain brokerage to find a buyer for the property. When they find a buyer and the sale is completed, they will receive a commission, which is usually based on percentage and is defined in the listing agreement. Commission rates vary, and are often negotiable.
Types of listing agreements
While there are many different types of listing agreements, most of them fall into these two common categories. If you are unsure what type of listing agreement is being presented by your realtor, be sure to ask for details.
Exclusive agency listing – With this type of agreement, only one broker has permission to find a buyer for your property. If you end up selling the property yourself, the realtor doesn’t receive payment. Similar as with an open listing, this can disincentivize the listing broker from giving your home the time and attention it needs to sell.
Right to sell listing – If you have this type of contract, only one realtor can find a buyer, and they receive the commission regardless of who sells the property. So even if the homeowner is able to find a buyer, the listing broker would still receive commission. These contracts are the most common in today’s market.
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Aspects of a listing agreement
So what can you find in a listing agreement? More than you might expect, actually. Let’s get into details.
- Property information – details and a description of the property as well as personal items that the seller will leave behind or take with them. Items that stay behind, like a fridge or other appliances, are called ‘conveyed’. You can learn more about what types of items generally convey here.
- Responsibilities – This section entails the duties of the broker and the seller while the house is on the market.
- Length of agreement – This is usually negotiable, and is typically between 3 and 6 months long.
- List price and commission – This section states how much the property will be listed for, and how much commission will be paid to the broker when the sale is complete.
- Termination clause – Here you’ll find information on what will happen if the home doesn’t sell within the agreed upon timeframe. The broker may request a fee, or the contract may simply be terminated. Of course, if you like your agent, you may have the option of resigning the agreement.
- Protection period – If your agreement has a protection period, this is where you’ll find it. What exactly is a protection period though? Let’s say your contract ends, and then a short time later someone who was shown the house during the period of the listing agent ratifies a contract to buy it, the listing broker can still earn commission, even though the agreement has technically already ended. In many cases, this period is about 10 days after the end of contract. However, if the property is already listed with another real estate company, it may not apply apply to the original seller’s broker.
What is the benefit of having a listing agreement?
As with all well-intended contracts, listing agreements protect both the seller and the broker from unforeseen circumstances, and lay out the expectations and responsibilities of both parties during the process of selling a property. Without one, you may find yourself in a complicated situation.
Part of selling your home is to make it look inviting to potential buyers through staging. Find out more about how to live in a staged home while you’re waiting for the perfect buyer to come along.
I am a licensed realtor in DC, MD, VA, and WV. If you’d like to know more about my services, or if you have any questions about listing agreements, contact me here.
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