Once you’ve decided to sell your home, most people are eager to get their house on the market and start their next chapter. However, before you can really get down to business, you have to sign a listing agreement with your real estate broker.
Listing agreements come into the home selling process once your house is ready to list and you’ve found a real estate agent, but before you’ve actually listed it. To move forward with a listing agreement, both you and your real estate agent must sign the contract that establishes the terms of your upcoming home sale. Both parties must dissect and fully understand this document so that all goes through correctly and legally.
We’re here to help you better understand listing agreements and how it plays into selling your home. This article will cover the different types of listing agreements, what’s involved, how they are negotiated, and other helpful tips you need to know.
Listing Agreement Defined
A listing agreement is the official employment contract between a property owner and a real estate agent or broker that sets the binding expectations and arrangements of your business. The primary agreement is that the real estate agent has permission to present the homeowner’s house to potential buyers and represent the homeowner. It outlines the type of commission your real estate agent will receive for doing so and also defines the roles of both the seller and the agent.
The agreement is meant to protect both parties. It ensures that the real estate agent will be fairly compensated with a guaranteed commission if they sell the home as planned. It should also protect the homeowner from being tied to an agent that is not fulfilling their end of the service agreement.
What’s Included in a Listing Agreement?
While these contracts all serve the same purpose, there may be some slight differences from contract to contract or from broker to broker. These are the general items you should find in a listing agreement:
List of seller’s and broker’s duties
Broker’s fee (the commission a broker charges to perform certain transactions or provide specialized services for clients)
Description of the property
List of personal property included in the sale
List of personal property to be removed upon sale
Terms for mediation
Contract expiration date (most listing agreements expire within 6 months, after which the contract is terminated)
Mediation and dispute clause (a clause is often added to ensure that, should a dispute between the homeowner and their agent arise, they will use an impartial third party to help mediate the disagreement)
The Three Types of Listing Agreements
There are three primary types of listing agreements that you will see as a homeowner trying to get their house sold. Let’s outline the differences between each.
An exclusive right-to-sell agreement guarantees that the agent you’ve hired has the right to exclusively market and list the house and earn a commission on the sale. This is the most common type of agreement since it ensures an actual profit for the agent—even if another agent leads to a buyer, the broker who the seller is contracted with will receive their commission either way.
Though it is a bit more limiting for sellers since they must fully rely on their exclusive agent to successfully sell the home, they are also benefiting from a dedicated agent who is pooling their resources to get that sale.
Exclusive agency listing
For exclusive agency listing agreements, one broker is authorized to act as the exclusive agent for the seller. However, unlike the exclusive right-to-sell option, the seller retains the right to sell their home without the broker. Keep in mind, though, that the seller is still obligated to pay a commission to the broker if the broker is the cause of the sale.
An open listing agreement is the most “non-committal” for the seller in that it allows any agent to list or sell the property. This means that the homeowner is only legally obligated to pay a commission to the broker that actually sells the property, which is the primary reason open listings aren’t as popular among real estate agents.
In an open listing agreement, the homeowner also retains the right to independently sell the property themselves and is under no obligation to pay a commission at all. Because this adds a level of insecurity for the real estate agent, these are the least popular and are usually only agreed upon by agents if they already have a promising buyer in the pipeline. Otherwise, sellers choose this type of agreement if they need to sell their home especially quickly or if they want to save money on a commission fee.
Negotiating Leasing Agreement Terms
When you’re establishing a listing agreement, anything can be negotiated between the two parties. However, some of the most common negotiation points include:
The length of the contract
Whether the real estate agent will be representing both you and the buyer as a dual agent
Type of listing
Your negotiation experience is really going to start with finding the best real estate agent that is willing to work with you. BidMyListing allows you to compare multiple real estate agents from the comfort of your own home so that you have more control over who affects the sale of your home.
When Do You Sign The Listing Agreement?
You sign the listing agreement once you’ve found a real estate agent or broker and negotiated the terms to the fullest extent. Without your signoff, the home selling process can’t proceed, so it’s best to select the type of listing agreement you want and get the sale underway.
Can You Terminate a Real Estate Listing Agreement?
You have the right to fire a real estate agent if they are not performing their duties listed, but make sure that you take the time to read the fine print to ensure that you agree to everything in the listing agreement. The right real estate agent will be trustworthy enough to avoid termination altogether, so do your research before going with the first real estate agent from your Google search.
A real estate listing contract is one of the most important first steps in getting your home on the market, and it can be a relatively painless process with the right real estate agent. You want to find a real estate partner that will work with you and sincerely do their best to get you the best deal they can on your home.
It’s not always possible to know when an agent is the right fit for you and your house, so if you are looking for a real estate agent, let BidMyListing help you cut through the chatter and connect with the right people.
With MyBidListing, you skip those impending and overwhelming feelings that come with trying to sell your home and instead you focus on selling your listing. In two easy steps, you can hand-pick your real estate agent from a pool of interested partners just by creating a quick profile for your home. MyBidListing technology takes care of the rest and pairs you with potential real estate agents who will make offers on your home to work with you.
The best part of this is how easy it is for homeowners—with minimal stress and effort, you can skip the hassle of endless online research and get right to the chase with competitive and prepared agents. Get started with finding a real estate agent for you today with MyBidListing!
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