The Home Listing Agreement From A- Z
As a seller you will be required to sign a listing agreement with your agent. A listing agreement is basically an agreement where the seller signs an agreement with a broker/agent for the agent to sell their home for them.
There may or may not be limits put upon the seller as to how much the seller can do or is expected to do when it comes to the sale of their home.
This contract is generally required by law and can vary from state to state; however there are generally some common styles that are utilized most often.
There are actually three typical types of Agreements that can be signed; although there are many others out there that are similar to these three main styles but have their own individual additions or omissions.
Listing agreements are meant to benefit both the seller and the agent; although in most cases it is to benefit the agent for the work they will be putting into the sale of your home. Nobody likes to work for free and a listing agreement helps an agent/broker assure that their hard work will pay off when the home sells. These agreements can also vary according to state laws but in general the most typical styles are what are covered in this article.
Exclusive Agency Listing, Open Listing, and the Exclusive Right to Sell Listing are the three typical types of listing agreements that most agents will offer. Each choice depends upon what you are willing to do as work for yourself and what you expect from your agent.
Some agents and/or agencies will offer only one standard agreement or two; while other agencies could offer you more or less and even different types. Your choice should also depend upon what your particular area is experiencing locally as a real estate market as a whole.
Exclusive Agency Listing
This type of listing agreement is probably one of the most commonly utilized agreements in the business with some different variations in how the agreement is written up and what is included. The exclusive agency listing and the open listing are quite similar except in the case of the exclusive agency listing a broker represents the owner.
The owner may sell their own property if they can on their own and not pay a commission and the broker is free to work with other brokers in order to bring in buyers to make offers on the home. If the broker alone sells the home then the broker gets paid a listing commission; however if another broker brings the buying party in then the commission is shared with the selling broker.
In either case the commission is paid by the seller but it is one common commission that is split between the two agents if there are two involved. This type of agreement is also the best one for the seller because the seller is represented at all times from the very beginning to the very end of the sale unless the seller sells the home themselves and then in some instances these the agent is not obligated to represent them fully, depending upon the agreement.
An open listing agreement is an agreement that allows the owner to sell their own home and is not an exclusive agreement; whereas the owner can list with various brokers and pay only the broker that actually sells the home. With an open listing the biggest difference from the other agreements is that the seller actually only pays the agent who sells the home and not the agent that represents the seller. If the seller sells their own home they pay no commission because they utilized no agent.
There are dangers with this type of agreement and this could be a case of “it sounds so good to be true” because you could literally end up listing but with your own leg work end up paying no commissions. While this sounds wonderful it also comes with some issues, such as you have no representation or guidance should you be the person who sells your home.
It also requires you to do a lot more work and most people simply do not want to put in the hours it takes to utilize an open listing. Some agents may not offer this type of listing either as they are taking a chance on doing a lot of work and ending up with no commission.
Exclusive Right to Sell Listing
This is probably the other most commonly utilized type of listing available. In this case your broker has exclusive right to earn a commission representing the seller and bringing in and representing the buyer. In this case the broker must provide what is best and most fair for each party and generally will make it so there is nobody who underpays or overpays.
The seller cannot sell the home themselves unless there are exceptions written into the contract. The seller pays both the buyer’s agent fees and the sellers agent s fees because the agent is one in the same. This is probably one of the other most common types of listing agreements offered.
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