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Once you have selected a real estate professional to sell your home, you will work together to complete a listing agreement. This legally binding contract authorizes a broker and his or her sales associate (your listing agent) to find a buyer for your home, according to the conditions specified in the contract.
An Exclusive Right to Sell is the most common type of listing agreement. Open Listing, One-time Showing and Exclusive Agency agreements are also available, but are less frequently used. Your real estate agent can explain them and help you select the one that best suits your situation.
Here is a brief overview of these four types of listing contracts and their uses.
Exclusive Right to Sell - This most widely used listing agreement allows the listing agent to market your home to other real estate professionals who represent buyers. Your agent will receive a commission no matter who brings the buyer to you. It might be your agent, another agent from that company, an agent from another real estate company or occasionally, even you, the seller, who actually finds the buyer. Listing agents and brokers prefer this type of agreement because it guarantees them an income which will cover their time and efforts and the cost of marketing the home once the sale has been closed.
Open Listing - Frequently used by owners selling their own homes, this contract is generally offered to several brokers at once, and commission is due to the one who produces a qualified buyer with an acceptable offer. Normally the broker and agent would not market the home under the terms of an Open Listing agreement.. Essentially you are a "for sale by owner" marketing your own home and offering to pay a fee to a broker if he or she finds a qualified buyer before you do. The commission paid to the agent who finds the buyer is typically about half of a normal fee.
If you find a buyer on your own, you don't pay a commission at all, unlike the Exclusive Right to Sell Agreement, where the listing agent earns a commission no matter who locates a buyer. If you sign an Open Listing Agreement be sure it has a reasonable expiration date. You may want to take advantage of the marketing a real estate agent can do for you and sign an Exclusive Right to Sell Listing later. Both agreements should not be in force at the same time or you may find yourself owing commissions to more than one broker. You can always extend the contracts if you wish.
One-time Showing - This one-time agreement is similar to the Open Listing because it is used by a real estate agent when showing a "for sale by owner" home, and it guarantees a commission to the agent if that customer purchases the home. It's essentially an Open Listing with a very short time frame, often only one day, and is usually restricted to one buyer client. The agent is not responsible for marketing the home and will usually represent the buyer rather than the seller as in an Exclusive Right to Sell.
Exclusive Agency Listing - This agreement, which is sometimes used in hot markets, allows an agent to list and market a home and receive a commission if they find a buyer. It also gives the sellers an opportunity to find their own buyer without paying a commission. An Exclusive Agency Listing may be marketed through the local Multiple Listing Service unless such listings are prohibited.
Most listing agents use preprinted forms required by their Multiple Listing Service. Everything in a listing agreement is negotiable and may be adjusted to meet your specific needs. However, you must adhere closely to the listing forms and local rules if you want your listing to be accepted by the Multiple Listing Service, which is one of the advantages of entering into a listing agreement.
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