Signing a listing agreement with a real estate agent is a major commitment.
You’re trusting that agent or broker to have your best interests when selling your property.
While great real estate agents and brokers do exist, there are ones who are experts at using the listing contract against you.
This almost always happens because the seller doesn’t really know what they’re signing.
They just assume their agent or broker is trustworthy and sign wherever they’re told.
But here’s the thing…
A listing agreement is a legally binding contract between you – the homeowner – and the real estate brokerage you hire to sell your property.
Not knowing what this contract says can backfire on you.
I’m going to help you avoid that.
For you to have peace of mind when executing the contract with your realtor.
In order to do that, we’re going to discuss the three most important things you need to know before signing a listing agreement.
Let’s get started.
Different types of listing agreements
There are several types of listing agreements a seller can sign with a real estate agent to sell a property.
Each of these defines the seller and realtor relationship in a different way and can have a distinct impact on the sale of your property.
This is why it’s important to know about the different types of listing agreements – before signing.
Let’s go through the four agreements that are most commonly used.
Exclusive right to sell listing
The exclusive right to sell listing agreement gives a real estate agent (and their brokerage) exclusivity to sell a property.
This means that a seller cannot hire another real estate agent during the duration of the contract.
The real estate agent takes on all responsibilities of selling the property – and the seller pays them the agreed-upon commission once the property sells.
The exclusive right to sell listing agreement is the one that is most commonly used and is the one you’ll most likely be signing with your realtor to sell your home.
Exclusive agency listing
The exclusive agency listing agreement is similar to the exclusive right to sell, except for one thing: if the seller finds a buyer, then their real estate agent is not owed a commission.
This is more common when a seller is thinking of taking the “for sale by owner” route but wants the security of having a real estate agent.
Most good listing agents won’t agree to this type of contract.
Because the exclusive agency listing opens up the possibility of them working for free.
This type of listing agreement means exactly what it says – open.
The open listing agreement allows a seller to work with multiple real estate agents and still allows them to try and sell the property themselves.
Whichever agent brings a buyer is the one who gets paid a commission.
And if the seller finds a buyer, then they don’t pay the agent’s commission.
But good luck finding any real estate agent to agree to this type of agreement.
If you do, you’ll be the one stuck doing all of the work.
A net listing is another agreement that isn’t common.
And it’s illegal in some states.
Here’s how a net listing agreement works:
1) The seller makes an agreement with their real estate agent for a price they’ll take for their house.
2) Anything over that amount is paid to the real estate agent.
What’s included in a listing agreement?