Real Estate Listing Agreement Types
Real Estate Listing Agreement
Below are some of the standard Real Estate Listing Agreement types that are available with your selected Listing Agency. Some Agents will refuse certain contact types because they have learned they generally do not result in closing a sale.
Exclusive Agency Listing Agreement
An exclusive agency listing contracts with one agent to sell the home. If that agent or any other licensed cooperating agent finds an acceptable buyer, the seller must pay a sales commission. The owner still reserves the right to sell the property by themselves and thus avoid paying a commission. The broker is free to cooperate with another brokerage, meaning the second brokerage could bring an able buyer whose offer the owner accepts. Typically, the broker is paid a listing commission that is shared with the selling broker, so the owner pays both fees.
Why a Listing Agent might refuse this Real Estate Listing Agreement type. This is like one person is committed to a relationship(Agent) when the other continues to date(Seller). The Listing Agent could not be sure if the Seller obtained a Buyer as the result of their marketing efforts and expense. For example, if a prospective Buyer drives by the home as a result of advertising of the Listing Agent. The Owner is outside and sees the prospective Buyer driving by slowly and stopping in front of the home. The owner asks if they are interested in taking a tour, prospective Buyer gets out of the car and falls in love with the house. They can conspire to remove the Listing Agent from the equation, to avoid paying the commission. The Seller wins, the Buyer wins, and the Agent is left with the bills and no paycheck.
Open Listing Agreement
An open listing is like a “for sale by owner” listing. It is a non-exclusive agreement, which allows the owner to execute open listings with more than one real estate broker and pay only the broker who brings an able buyer whose offer the owner accepts. However, no commission is owed if the seller finds a buyer on his own, without any agent’s help. The open listing creates competition between the seller and agent(s) to find a willing buyer.
Why a Listing Agent might refuse this Real Estate Listing Agreement type. An Open Listing Agreement is like a relationship where both people, Listing Agent, and Seller date but expect it will never result in anything worthwhile because neither is investing anything into the relationship. In an Open Listing Agreement, an Agent’s commission can be deducted from the sales price to make it more desirable for a Seller to want to accept an offer that has no agent involved, even though they don’t get any more money. This type of listing is hard to locate a Buyer for because the Agent would be foolish to advertise it in any way.
Exclusive Right-to-Sell Listing Agreement
An exclusive right-to-sell listing is the most commonly used because it is the least abusive situation to the Listing Agent. The agent has complete control of the transaction, and so even if the seller, the listing agent or a cooperating selling agent finds an acceptable buyer, the listing agent will still earn the sales commission. However, when the listing expires the seller does have the option of finding another agent if they are not satisfied with their performance.
Why a Listing Agent might refuse this Real Estate Listing Agreement type. The Agent might not agree with the Seller’s valuation and does not want to spend the money on marketing a home they think will not sell. They might prefer to work with Buyers, so they might not be equipped to market your home to the masses. An Exclusive Right to Sell is a like a marriage of equal commitment on both sides, so it is the most desirable Real Estate Agreement type. Both the Seller and the Listing Agent are committed to a common goal, to get the home sold at the highest price. The Seller cannot try to claim a Buyer of their own; they cannot change the commission based on the situation. This is a situation where an Agent should feel comfortable spending as much money as they like on advertising and as much time on it as they like. They are given a certain period to sell the home. At the end of that contracted time, the Seller can elect to hire another agent at the end of the contract if unsatisfied for any reason.
A valuable marketing tool for listing agents is the multiple listing service (MLS). The MLS allows all the listing information as well as photos of the real estate to be shared with other licensed Realtors who are representing potential buyers. Also, Buyers can locate the sale info when they are doing their own research. An MLS number is assigned to each listing; it is a unique number given to homes listed in the Multiple Listing Service (MLS) used by Real Estate professionals.
It is important to understand that a real estate listing contract is a legally binding agreement that sets out the rights and duties of the seller and the listing agent. It is important to consider your options when making your decision. Keep in mind that all listing contracts have expiration dates and you can change your listing choice when the contract expires.