Listing contracts are a necessary part of a property sale if you want to use the services of a real estate agent. The listing agreement provides a structure for the details of selling your home and a framework for the duties and expectations of you and your real estate agent. A listing agreement takes place in any market when you hire an agent, regardless of whether you are in Vancouver, BC, or Denver, CO. In the following we answer all the questions you may have about a listing contract.
What is a listing contract?
A listing contract is a legally binding contract between a home seller and a real estate agent. The seller hires the broker or broker to sell the home and authorizes them to find a buyer for the home and in return the seller agrees to pay the broker a commission. The commission is usually a percentage of the home’s selling price. For example, if the home sells for $ 225,000 and the agreed commission is 6% (although this fee is negotiable), the seller owes the agent $ 13,500. This amount is usually split evenly between your broker and the buyer’s broker.
What are the 3 most common types of listing agreements?
Your listing agreement will have a title above the contract. These titles vary across the country. So read the listing agreement carefully to understand the agreement you have with your particular broker or agent. Collection relationships typically come in three types:
Agreement on the exclusive right of sale: This type of listing agreement is the most common. It is a contractual agreement between the seller of a property and the broker, whereby the broker has the exclusive right to represent the property. With this agreement, the broker is entitled to his commission regardless of who sells the property, as long as the listing agreement is in effect.
Exclusive agency entry: This listing contract is a contractual agreement between the property owner and the broker, with the broker acting as the sole representative of the seller. The seller can sell the property himself and does not owe the agent any commission. However, if the agent is the one who sells the property, the commission is owed to the agent.
Open offer: This listing agreement is a contractual agreement when a home seller has given more than one agent permission to advertise a property and the agent only receives a commission when they sell the property. When the house is sold by the home seller, no commission is paid.
What does a listing agreement contain?
The listing agreement usually comprises several articles. First, the property is described, including any personal effects that are left behind when the property is sold (e.g. curtains) and any personal effects that you will take with you when moving (e.g. a pool table).
In addition, the listing agreement expressly sets out the duties of both the home seller and the broker. It contains the agreed listing price for the house, the terms of the agent’s compensation, the date the contract was terminated, information on dispute resolution between the seller and the agent (if necessary) and any additional terms and conditions for the sale of the house.
When do you sign the listing agreement?
The listing contract is signed when you and the realtor have worked through all the details of selling your home and are in agreement on every point. With your signature, you declare that you are ready to provide the agent with the necessary steps sell your house.
Do I have to sign the listing contract?
Once you’ve decided to hire a realtor to help you sell your home, you’ll need to sign a registration agreement. It is a legally binding document that outlines your preferences in terms of selling your home. If you want to sell your home yourself, there is no need to sign a listing agreement as there is no broker involved in the transaction.
Can I negotiate a listing contract?
Yes, you can negotiate certain conditions in the listing agreement. For example, the amount of commission you pay to the broker is negotiable, as is the length of the contract. Usually small changes can be made directly to the contract and larger changes can be dealt with in an addendum if necessary.
How long does a listing contract last?
A listing contract is valid as long as you and your agent agree. Listing contracts usually last three to six months. A shorter time frame gives you the opportunity to hire a new agent if you are not satisfied with your current agent’s services. However, if at the end of a listing contract you are satisfied with the work the broker does for you, you can easily extend the contract for another three months.
What do I have to look out for in a listing contract?
Duration of the agreement: Most listing agreements have a standard term that is negotiable. Some agents prefer a longer term (six months), while you may find a shorter term (three months) better.
List price: This is the selling price at which you and the realtor are offering your home.
Commission: This is specified in the listing agreement and is also negotiable. It is usually a percentage of the sale price, 3-6%, and is paid by you to the broker or agent for their help in selling your home. If you agree to pay a “cooperation commission” to the buyer’s broker, that broker will be paid out of that commission.
Types of listing agreements: The title reads something like Exclusive Right to Sales Agreement, Exclusive Agency Listing, or Open Listing, but read the agreement carefully to understand your relationship and when a commission is due to the broker.
Each party’s responsibilities: For example, whether you give the agent permission to hold an open house.
What are the costs associated with a listing contract?
As a rule, there are no specific costs associated with the listing agreement. However, the agreement specifies the broker or Broker’s commission. This fee is paid to the agent at the time of closure, after which Title company has confirmed a unique title and the property is formally transferred to the buyer.
What if my house doesn’t sell?
If your House does not sell You can renew your listing agreement with the broker within the period specified in the listing agreement if you are satisfied with the work done for you. You are also free to hire a new broker to sell your home if that best suits your sales goals. Be sure to review the cancellation language to confirm whether you owe any charges for the time and costs incurred by your agent during the listing period.
What is a term of protection?
A protection period, sometimes called a tail period, in a listing agreement helps protect the broker from losing his commission. It is valid for a certain period after the listing agreement has expired. The term of protection states that if someone the house was shown to by the agent wants to buy the house after the listing agreement has expired, but the agent is still entitled to their commission during the term of protection.
Can I make changes to the listing agreement after it has been signed?
You can change the listing agreement after you have signed it, but only if all parties agree. As a rule, changes to a listing agreement are made in writing, either directly on the contract itself or in an addendum to the contract.
Advance Guide does not provide legal advice. This article is for informational purposes only and is not a substitute for professional advice from a licensed attorney.