If you are thinking of selling your house through a real estate agent, a Real Estate Listing Agreement will be one of the first documents you sign. A listing agreement is a legally binding contract that identifies the extent of the roles and and responsibilities between you and the agent.
Although a Real Estate listing Agreement can vary from place to place, a common practice among listing agents to use boilerplate, industry standard forms. No matter which agreement you decide to sign, read it carefully or consider hiring a legal representative if you need to. Remember everything on a Real Estate Listing Agreement is negotiable.
Common Real Estate Listing Agreements
There are three common listing agreements or contracts, and the one you sign will determine the level of service, rights and responsibilities that both you and your agent will agree to over a set period of time.
Exclusive Right to Sell Listing Agreement - The Exclusive Right to Sell Agreement is the most common listing contract. The agreement gives the selling agent an exclusive right to list and sell your home for a set period of time. The commission you pay the agency will come at the time of closing and is usually take out of the proceeds from the sale.
Exclusive Agency Agreement - Almost identical to the Exclusive Right to Sell Agreement, the Exclusive Agency agreement allows the seller to retain the right to sell the property without paying a commission if the buyer was not introduced to the property by the agency.
In the event that an agency other than the listing agency sells the home, the listing agency typically splits its total commission with the second agency.
Open Listing Agreement - An open listing agreement gives no single agency exclusive right to sell the property. The seller can sell it himself without paying a commission to anyone and can he can sign the agreement with more than one agency.
If the seller does pay a commission, it's to the selling agency only. No commissions would be shared in an Open Listing scenario.
Common Terms to Consider in Listing Agreements
Term of the Agreement - The term of the agreement sets the amount of time that your agent will represent you and market your home. The longer the agreement generally benefits the agent because it provides more time to find a buyer for your house. In a weak market that may be okay, but in a sellers market, you may not want to commit your self to one agent for an extended period of time. but if homes are selling quickly, you don't want to be committed to one agent for more than a few month. Consider how long home in your area are typically on the market before they close when considering how long to lock yourself into a listing agreement. If the house doesn