Our Beautiful House
  • Home
  • Decorate
    Decorate
    Show More
    Top News
    10 solutions for small house interior design
    November 9, 2022
    5 Tips to Create a Home Bar
    May 7, 2021
    10 Home Renovations That Will Hurt Your Home’s Value
    July 30, 2022
    Latest News
    Just What Exactly Is Contemporary Design?
    December 8, 2022
    Contemporary Design Style And The Essentials To Master It
    November 22, 2022
    9 Popular Bedroom Flooring Settings to Consider
    November 21, 2022
    How to Build a DIY Breakfast Nook
    November 16, 2022
  • Rooms
    Rooms
    Show More
    Top News
    Working from Home: 10 Luxurious Offices and Studies
    September 14, 2020
    Living Room Design Trends
    November 5, 2020
    These 5 Living Room Looks on Instagram Have Us So Excited for Fall
    September 20, 2020
    Latest News
    9 Popular Bedroom Flooring Settings to Consider
    November 21, 2022
    How to Choose the Best Garage Floor Tiles
    November 21, 2022
    Simple Steps of Kitchen Remodeling
    November 21, 2022
    Bedroom Ideas for Sophisticated Design Lovers
    November 11, 2022
  • Outdoor
    Outdoor
    Show More
    Top News
    Did You Know Miami Has a Vegan Food Hall? Neither Did We
    May 9, 2020
    Tips for Staging with Plants
    June 13, 2022
    New Places That Made Fort Lauderdale A Better Place to Live
    January 14, 2020
    Latest News
    5 Best DIY Landscaping Ideas
    November 22, 2022
    15 Fun Backyard Ideas That Kids Will Surely Enjoy
    November 14, 2022
    25 Chic Modern Outdoor Furniture Ideas
    November 7, 2022
    Small deck ideas: 31 budget decking designs for tiny gardens
    October 18, 2022
  • Lifestyle
    Lifestyle
    Show More
    Top News
    Miami Beach, minus 80,000 Art Basel Visitors, Vows To Save Art Week
    September 17, 2020
    Weekend Project – Organize Your Kitchen Pantry
    January 14, 2021
    The Country’s Largest Shopping Center is Heading to Miami
    December 22, 2019
    Latest News
    The 6 Worst Types of Clutter for Homeowners
    December 5, 2022
    12 Hidden Storage Ideas for Combating Clutter
    November 21, 2022
    15 Fun Backyard Ideas That Kids Will Surely Enjoy
    November 14, 2022
    10 Ways to Let Go of Sentimental Clutter
    October 18, 2022
  • Real Estate
    Real Estate
    Show More
    Top News
    Taking Care of Your New Home, Season by Season
    June 4, 2020
    What Makes a Good Real Estate Agent for Home Sellers
    June 1, 2020
    4 Things Sellers Need to Know about Backup Offers
    April 26, 2022
    Latest News
    Homebuyers Avoid Bidding Wars. Should You?
    September 13, 2022
    10 Questions Every Homeowner Should be Asking
    September 11, 2022
    6 Ways on How To Invest in Real Estate
    September 6, 2022
    Are You Being Represented by a “Yes-Agent”?
    August 9, 2022
  • Contact
Reading: Types of Listing Agreements: Understanding Real Estate Agent Contracts With Sellers
Share
Notification Show More
Latest News
Just What Exactly Is Contemporary Design?
Decorate
The 6 Worst Types of Clutter for Homeowners
Organization
Contemporary Design Style And The Essentials To Master It
Decorate
5 Best DIY Landscaping Ideas
Gardening
12 Hidden Storage Ideas for Combating Clutter
Organization
Aa
Our Beautiful House
Aa
Search
  • Home
  • Decorate
  • Rooms
  • Outdoor
  • Lifestyle
  • Real Estate
  • Contact
Follow US
  • Blog
  • Complaint
  • Advertise
© 2022 Foxiz News Network. Ruby Design Company. All Rights Reserved.
Our Beautiful House > Blog > Real Estate > Guides > Types of Listing Agreements: Understanding Real Estate Agent Contracts With Sellers
GuidesPreparing to SellSeller Guide

Types of Listing Agreements: Understanding Real Estate Agent Contracts With Sellers

Last updated: 2020/06/04 at 5:50 PM
By Stefan #TheListingBroker - Real Estate
Share
10 Min Read
SHARE


Selling a home for the first time? As you’re choosing a listing agent, you’ll want to do some due diligence and make sure you understand exactly what’s included in your real estate agent agreement.

Because it’s a legal document, listing agreements can be complicated to decipher, especially since you may see it only a few times over a lifetime. It helps to know the most common elements in a listing agreement so you recognize if what you’re signing is standard or if it’s missing seller protections or has excessive agent benefits.

What is a listing agreement?

A listing agent agreement, also known as a listing agent contract, is a legally binding document between a seller and the real estate agent representing them in the sale of their home. There are several different categories of standard listing agreements, but any agreement can be modified to fit a specific situation.

Most agents who are part of a real estate agent organization or brokerage will use the standard listing agreement provided for them for each type of real estate contract, including:

  • Exclusive right to sell
  • Exclusive agency
  • Open listing agreement
  • Net listing agreement

What’s included in a seller-broker agreement?

While contracts can be amended or modified, and while addenda may be added, there are some common real estate listing agreement terms:

Commission amount

The commission amount is usually 5-6 percent of the sale price, which is split roughly 50-50 between your listing agent and the buyer’s agent. Whether you owe your agent a commission depends on the type of listing agreement that is in place — more on that later.

Listing duration

This identifies how long your contract is valid before it expires and your agent is no longer representing you. In most major real estate markets, it’s usually three months, but it can be longer or shorter in duration, depending on the state of your local real estate market.

Cancellation clause

The cancellation clause outlines any penalties you will or won’t face if you attempt to cancel the contract before your agent successfully sells your home.

Responsibilities

This section details what tasks and services your agent will complete. Common examples include professional photography, getting the home listed on the MLS and detailed marketing services.

Disputes

These are guidelines around how issues or conflicts will be handled. This can include disagreements over listing price or marketing strategies.

Ownership

In this section, you confirm that you are the home’s owner, you have the right to sell the house and you’re legally allowed to transfer the title.

Expiration

This notes that if the contract expires before the house is purchased, the listing agent can provide a list of all buyers who saw the home while they were the agent. It says that if one of those past buyers comes back after the contract expires and wants to buy the home, the listing agent is still due their commission, within a specified time frame. It’s also called a holdover clause or a carryover clause.

Dual agency

This is when a listing agent keeps the full commission because they’re representing both the seller and the buyer. It’s illegal in many states, and in the states where it is legal, there are restrictions set by both the state and local professional organizations that prevent conflicts of interest.

Type 1: Exclusive right to sell listing agreement

This is the most common type of listing agreement. It says that the listing agent has the exclusive right to earn the commission if they bring the buyer (either directly or via another agent). It’s an exclusive contract with your real estate agent that prevents you from working with another agent during the term.

In this arrangement, all offers go through the listing agent, which protects the agent from losing time and money on a deal that they won’t receive any commission for.

The contract can sometimes include an exception if one specific person (who is predetermined) ends up buying the home — a specific family member, for example. The name has to be included in the contract before signing, and it must be something that was in the works before listing.



Benefits of an exclusive right to sell listing

Agents work incredibly hard to secure a buyer, because they won’t get their commission until they do. If you engage a full-service agent with an exclusive right to sell listing, you’ll get the full real estate agent experience and the expertise that goes along with it.

Type 2: Exclusive agency listing agreement

This type of listing agreement is far less common. In this agreement, you still hire a listing agent, but if you are the one who ends up finding the buyer, you get to keep the commission.

Benefits of an exclusive agency listing agreement

The main benefit here is that you have an opportunity to avoid paying commission. This type of agreement is best for people who want to be hands-on in the process and those who are comfortable investing in their own marketing.

You’ll also have the peace of mind that comes with knowing there is still an agent working on your behalf (even though they may not provide all the marketing services a full-service agent typically would).

Set up a good way to track whose marketing efforts got each potential buyer through the door so you’ll know who gets the commission.

Type 3: Open listing agreement

An open listing agreement is not a formal contract. Instead of engaging a listing agent, a seller instead allows local buyer’s agents to market the listing in hopes of getting the 3 percent buyer’s agent commission.

The whole process happens without a listing agent, sort of like a for sale by owner (FSBO) transaction. To start this process, you would reach out to a handful of local buyer’s agents, letting them know that you’re willing to pay a buyer’s agent commission. If a buyer’s agent is interested in this arrangement, they may want to put it in writing before they bring their buyers through the door.

Benefits of an open listing agreement

An open listing provides some flexibility, as you’re not committed to one single listing agent agreement. And it gives you the ability to change direction or take the house off the market whenever you want, without a penalty.  But the biggest benefit is that since you’re not using a listing agent, you’ll only have to pay half as much commission — typically just 3 percent to the buyer’s agent (a savings of 3 percent).

You’ll want to do whatever you can to help the buyer’s agents you’re engaging sell the home. Give them a good description of the home, share your real estate photos, and give them permission to share your home with their clients as they see fit.

Type 4: Net listing agreement

A less common type of real estate agency agreement, a net listing agreement is when a listing agent guarantees to sell your house for a certain set price, and if they sell the house for a higher amount, they pocket the difference as their commission.

The reason this is a less common agreement is that net listings are illegal in many states. And in the states where they’re legal, which include Texas and California, there are rules in place to protect sellers and prevent lawsuits over perceived losses.

Net listing agreement considerations

A net listing can be good for someone who wants a quick sale and a guaranteed price, but it’s important to use an agent you trust. Because the listing agent is so invested in your purchase price, they could take advantage of the situation and not show you the lower offers received. That’s why these arrangements are illegal in many places — they’re considered financially risky.

Alternatives to a seller-agent contract

If you don’t want to sign a legally binding contract early in the home-selling process, consider Zillow Offers. If your home is eligible, we’ll provide a cash offer, and if you decide to sell, you’ll never have to put your home on the market or hire a listing agent.


SIGNUP FOR NEWSLETTER

TAGGED: contracts with sellers, listing agreements
Stefan #TheListingBroker - Real Estate June 4, 2020
Share this Article
Facebook Twitter Email Print
How you feel with this article?
Love0
Happy0
Surprise0
Wink0
Sleepy0
Sad0
Angry0
Leave a review Leave a review

Leave a review Cancel reply

Your email address will not be published. Required fields are marked *

Please select a rating!

Our Beautiful House 

  • Home
  • Decorate
  • Rooms
  • Outdoor
  • Lifestyle
  • Real Estate
  • Contact
Subscribe to Our Newsletter

Subscribe to our newsletter to get our newest articles instantly!

I have read and agree to the terms & conditions

Find Us on Socials

© 2022 by #TheListingBroker. All Rights Reserved.

Removed from reading list

Undo
Welcome Back!

Sign in to your account

Lost your password?