The type of listing agreement that provides the least protection for the listing broker is the

You’re ready to sell your house and you’ve chosen a real estate agent you trust. Now’s the time for you to think about signing a listing agreement. The listing agreement is a written arrangement between you and your selling agent to begin the selling process

You may be a bit nervous about signing the listing agreement, and you probably have a ton of questions. Here’s everything you need to know about the listing agreement, so you can sign with confidence and peace of mind.

What is a listing agreement?

If you want to sell your home using a real estate agent, you must sign a listing agreement. A listing agreement is a contract between you — the property owner — and a real estate broker. The contract authorizes them to represent you and find a buyer for the property. The agreement is legally binding and gives the real estate agent or broker the right to sell your home.

The three types of real estate listing agreements are exclusive right-to-sell listing, exclusive agency listing, and open listing. The listing agreement is an employment contract, not a real estate contract. The broker agent is hired to represent you, but no property is transferred.

Exclusive Right to Sell Listing

The exclusive right to sell listing is the most commonly used listing agreement between homeowners and real estate broker agents. Signing the listing agreement allows the real estate agent (or brokerage) full control over the transaction.The real estate agent is given the rights to market the home, list the home on the MLS, and receive the commission.

However, it’s possible to negotiate flexible agreements. You’ll want to start by clearly communicating how active you want to be in the sales process, and what you expect to happen if you, the seller, find a buyer.

Exclusive Agency Listing 

In an exclusive agency listing, the homeowner allows just one real estate broker agent to sell the home. It allows you to find your own buyer, in which case, the real estate agent would not receive a commission. This agreement also allows you to get the help of a real estate agent if you can’t sell your home yourself.

Open Listing

The open listing agreement offers the lowest level of commitment. Any agent who brings you a buyer can land the commission, and you can sell the property on your own — without paying a commission — if you find the buyer.

Open listings are regarded as best for difficult to sell properties or properties that need to sell fast. Potential buyers may consider open listings more cautiously than other types of listings. You could end up doing all the work and make less money on the sale.

Net listing

In a net listing, you set a minimum price you will accept for the property. If the property sells at a higher price, the real estate agent gets to keep the overage. It’s important to note that this type of listing is much less common, and even illegal in some states. Check your state laws before signing this type of listing agreement.

What goes into a listing agreement?

The listing agreement, particularly the exclusive listing agreement, involves everything, from whatever is included in your home sale, like appliances, chandeliers, and more, to the agent’s commission. Under real estate license laws, only a broker can act as an agent to list, sell, or rent another person’s real estate. Also, listing agreements must be written.

The contract sets the terms of how the real estate broker agent promotes your home. This includes the use of the MLS, internet marketing, lockbox, for-sale signs, and mediation. You also give the broker the right to use the listing content, which includes photos, graphics, videos, drawings, virtual tours, and written descriptions. 

The contract also lays out Equal Opportunity Housing rules, attorney fees, and dispute resolution. The terms involved are the foundation of your real estate transaction, so it’s important that you read carefully before signing the listing agreement.

What is a protection clause?

The listing agreement will probably include a clause that protects the agent or broker after the expiration date. This prevents you, the seller, from trying to avoid paying an agent’s commission. If you find a buyer while represented by the agent, but wait to close the sale until after your expiration date, this clause protects the agent/brokerage. 

How long is a listing agreement?

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A listing agreement is valid from the date you sign it until the expiration date. A broker listing agreement sets the time you keep the services of the broker. The condition of the home, the current real estate market, and homeowner’s needs influence the duration of a listing agreement.

A listing agreement generally lasts from two to six months from the time the home is put on the market. Shorter listing agreements give you the option to select another broker if yours does not live up to their responsibilities. Shorter agreements are favorable to you, since you can fire your broker if they don’t get a sale in that time frame. 

The expiration date also depends on the real estate market. You may want to sign up for a two-month contract if comparable homes in the area have sold in less than 60 days. 

What can you negotiate in the listing agreement?

In real estate, everything is negotiable. Speak to your real estate agent or managing real estate broker If you’re uncomfortable with certain terms. You may want to consider finding a different agent or a different brokerage If they refuse to negotiate. Be aware, some negotiations can make a real estate agent walk away from the deal. Here are some common things to negotiate in the listing agreement:

Expiration date 

Real estate agents want to be sure they can sell your house, so they may want a longer expiration to have plenty of time. You have a right to negotiate if you believe your home can sell faster. Most real estate agents will listen to your concerns and compromise.

Commission

Most listing (or seller’s) agent commissions are between 5% and 6% and are usually split with the buyer’s agent. The commission percentage is decided when you sign the listing agreement. It then becomes part of the MLS listing, so it can’t be changed once the agreement is signed. Legally, you can negotiate the commission percentage, but it might affect the sale. 

Most real estate agent fees go to marketing your house, so lowering the commission could lower the quality of marketing for your home. If you negotiate a lower commission for your seller’s agent, you also reduce the buyer’s agent’s commission. The decision could slow your buyer’s foot traffic.

Type of Listing

As we said before, you may choose the type of listing agreement to use. While most real estate agents choose to sign an exclusive right to sell agreement, you can negotiate a different agreement.

List Price

The listing agreement will specify what you will list your home for. Your real estate agent will determine a recommended list price based on market data, area comparable homes selling prices, and the condition of the home. As the homeowner, you have a right to negotiate the list price. 

Duties

A seller’s real estate agent’s duties include listing the address of the home online, posting a sign in the yard, and creating a list sheet. If you have any issue with these things or the other duties listed in the agreement, you can negotiate them with your real estate broker agent or their managing broker.

How to Get Out of a Listing Agreement

Tell your real estate agent that you’re unhappy and you want to cancel the listing agreement in writing. If your agent won’t let you out of the agreement, remember that the listing agreement is between you and the brokerage. The managing broker will ultimately make the decision.

If you’re ready to sell your home, UpNest can connect you with an area Realtor who has the experience and savvy to sell your home quickly. If you are looking to buy a home, we can help find financing options and an experienced buyer’s agent to assist your search.

Do you have to sign a listing agreement?

If you’d like a real estate agent to list your home, you will need to sign a listing agreement. However, if you list your home for sale by owner (FSBO), you won’t need to sign a listing agreement. In that case, however, you won’t have a real estate agent helping you.

What does signing a contract with a Realtor mean?

For buyers, some agents require a buyer’s agent agreement, which is contract of exclusivity between you and the agent for a set period, usually 3-6 months. For sellers, you’ll sign a listing agreement, usually committing to list with that agent for at least 6 months.

Can I break a listing agreement?

Listing agreements usually have provisions for ending the contract early, but there may be penalties, including financial repercussions.

Which of the listing agreements is the least exclusive?

Which type of listing agreement gives the broker the least assurance that he or she will receive compensation for his or her efforts?

Which type of listing give the broker the greatest protection?

What is a one party listing agreement?