The Listing AgreementSeptember 8, 2016
When it’s time to sell your home, you will need to sign a listing agreement with your real estate agent. This agreement is a contract between you and the agent in charge of selling your home. It gives the agent the right to list your home, advertise it for sale and manage the sale of all the terms.
It’s very important for you, the seller of the home, to understand the terms of the listing agreement. You will be bound by this contract, so make sure you have a good understanding of what you’re getting into.
Protects Both the Agent and the Homeowner
The listing agreement is intended to provide benefits and protections for both the listing agent and the homeowner. The listing agent gets the protection of knowing the homeowner is obligated to work with them for a minimum amount of time. The homeowner, or seller of the home, also gains protection because the agreement will explain the responsibilities of the agent and what happens if they don’t fulfill those responsibilities.
Listing Agreement Key Terms
As you go into the process of selling a home with a listing agent, it’s a good idea to understand a few key terms. Some of the terms you may find within the contract include:
- Commission – This is the amount you will pay the real estate agent when they sell your home. Commissions frequently seen in said agreements are: 5% or 6%.
- Protection Clause – Also known as a safety clause, this clause ensures protection for the agent or broker after the expiration date of the contract. It also protects the agent’s commission in the event the seller tries to find a buyer while represented by the agent, but tries to wait until after the expiration date to make the sale.
- Duties – This term describes the activities you should expect from your agent and what they are authorized to do for you. Sellers should always read through this list carefully and understand what it includes, such as posting yard signs, creating a listing sheet, listing the property on MLS, etc.
- Exclusive Right to Sell – This term provides your agent with the exclusive right to sell your property until the expiration date. This is the first choice of most agents and the most common type of agreement.
- Duration – The duration is how long the contract will last. Usually it will be three or six months, but may be longer, depending on the type of agreement. As a seller, it’s best to have a shorter agreement. Frequently the average days on market is used by good agents to list homes.
- Dispute Resolution – This term will represent the section of the agreement dealing with how disputes will be handled if they cannot be worked out informally. For example, it may state that disputes will be handled through mediation.
Related: What is a Deed of Trust?
Make sure you understand these important terms and what you are signing with a listing agreement before you sign.