A listing agreement is a legal contract between you and the Realtor that helps you sell your home. It states you’re hiring your realtor to handle the home sale and authorizes them to find a home buyer. In exchange, you agree to pay your realtor a commission.
Only sellers have to sign a listing agreement, but potential home buyers will need to sign a buyer’s agreement before realtor will represent them.
Signing any contract can be stressful, but it doesn’t have to be as bad as it sounds. Here’s what to know.
What in a listing agreement
A listing agreement lays out the expectations between you and your realtor. The agreement includes details about the process of selling of your home. You’ll want to look it over carefully and make sure you understand everything in it.
The listing agreement includes the following:
· Contact information
· Listing price
· Realtor fees
· Realtor duties
· Property description
· Items included in the property sale
· Items that will be removed after closing
· Agreement duration
· Conflict resolution details
· Protection periods
· Type of agreement
Contact information - Will include names, phone numbers, addresses, and any other information about the seller and realtor.
Listing price - Is the price your home will be listed at. You and your realtor will determine the listing price ahead of time, so check it to make sure it matches what you agreed to.
Realtor fees - Realtor fees are a % of the home’s final sale price. Commissions are typically 6%, with the buyer’s and seller’s realtors taking 3% each. The seller will pay both.
Realtor duties - Are your expectations of the realtor and what you’ve given them permission to do. If you want your realtor have open houses or list your home on the MLS, you’ll give them permission in this section.
Property description - Any personal property left behind after the property is sold will be covered here. It will usually include large appliances like washers, dryers, ovens, and refrigerators. It will also include items not included in the sale, which includes anything you’re taking with you.
Agreement duration - Most real estate listing agreements will be for 6 months, but this is negotiable.
Conflict resolution details – This will cover how any disputes are resolved between the property owner and realtor. It will specify whether conflicts are settled using mediation or arbitration.
Protection period – The protection period, protect the seller’s realtor from losing their commission. An example of this is in when a realtor shows your home to someone during the listing agreement period, but that person doesn’t buy the home until after the listing agreement has expired.
Type of agreement - Most agreements will specify one of 4 types of listings:
· Exclusive right-to-sell listing
· Exclusive agency listing
· Open listing
· Net listing
4 types of listing agreements
1. Exclusive right-to-sell listing agreement: This is the most common type of listing agreement. Exclusive right-to-sell listings give the listing realtor and their brokerage exclusive rights to represent your home. The realtor is entitled to their commission regardless of who sells the property, as long as the listing agreement is in effect.
2. Exclusive agency listing agreement: This is similar to an exclusive right-to-sell listing. The only difference is that an exclusive agency listing gives you a way out of paying a commission.
3. Open listing agreement: An open listing is a “last realtor standing” competition. This non-exclusive agreement allows you to use multiple realtors to sell your home. The realtor who sells the home is the only one who gets a commission. It also gives you the power to try to sell your home yourself, even while other realtors are trying to sell it, also. If you succeed, the realtor walks away empty-handed. For this reason, most realtors will be hesitant to sign an open listing agreement.
4. Net listing agreement: With a net listing agreement, you agree on an acceptable home sale price with your realtor. If the realtor sells the home for more than that price, they get to keep the proceeds. Net listings are not common and are illegal in some states.
5 easy things to double-check (and triple-check) before you sign a listing agreement
The entire listing agreement is important, but you can double-check 5 critical details in seconds:
1. The listing price
2. The agreement’s expiration date
3. The commission rate and how it’s divided with the buyer’s realtor
4. The type of listing agreement
5. Your personal property that is or isn’t included with the transaction
When do you sign the listing agreement?
You’ll sign the listing agreement after you and the realtor have agreed on all the details of your real estate transaction. By signing, you’re stating that you’re ready for the realtor to proceed with the steps needed to sell your home.
Do I have to sign the listing agreement?
Yes, the listing agreement is a legally binding document that outlines your preferences along with the realtor’s duties. If you choose to sell your home yourself, you don’t need to sign a listing agreement since you’ll represent yourself.
Can I negotiate a listing agreement?
You can negotiate several parts of a listing agreement, which include:
1. Realtor commission
2. Realtor duties
3. List price
4. Agreement duration
5. Listing type
How long does a listing agreement last?
Typically, listing agreements last 6 months.
How much does a listing agreement cost?
It doesn’t cost anything to sign the listing agreement. You won’t pay anything upfront, but the contract will specify the realtor’s commission fee. This fee will be paid at closing once the title company confirms a clear title and the property is formally signed over to the buyer.
What if my home doesn’t sell?
If your home doesn’t sell within the time frame of the listing agreement, you have 2 options:
1. Renew the agreement and keep your current realtor
2. Hire a different realtor
If you choose to find a new realtor, review the termination section of the agreement to make sure you don’t owe any expenses incurred during the listing period.
Can I make changes to the listing agreement after I sign it?
Yes, but only when all parties agree. Modifications to a listing agreement are done in writing, either on the agreement itself or through a listing agreement.
If I have questions about my specific listing agreement. Who should I talk to?
A local attorney is the best person to answer your questions. They’ll be able to address your concerns and any potential issues in the contract.
If you’re planning on selling and are in the market for a top agent to make it happen, I would love to help!
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Lainie Eilenberger, REALTOR
Key and Slate Real Estate Group
Keller Williams Realty
Licensed Realtor in Texas