Listing Agreement: What Sellers Need to Know

Selling your property can be challenging, especially if this is your first time. One of the initial steps in the process is to sign a listing agreement, which is a contract between you and a real estate agent that allows them to help you sell your house.

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This article will explain what a listing agreement is, and who are the parties to a listing agreement?, and why it is essential in the home-selling process.

What is a Listing Agreement?

A listing agent agreement (also known as a listing agent contract) is a legally binding contract between a seller and the agent that will represent them in selling their property. There are a few types of common listing agreements, although almost any agreement can be adapted to a particular situation.

Most agents who are members of a real estate agent association or company are going to use the standard listing agreement issued to them for each form of real estate transaction, including:

Exclusive Right to Sell
Exclusive Agency
Open listing agreement
Net Listing Agreement

Who are the Parties to a Listing Agreement?

Understanding who is involved is important. The two main parties involved in a listing agreement are:

The homeowner (seller)
This is the person who owns the property and wants to sell it. When a number of people owns an apartment, all owners must sign the agreement.

What the seller agreed to do:

Give honest and full information about the home.
Allow the realtor to show the property to possible purchasers.
Pay the agent if the house is sold during the contract period.

The real estate broker (or agent)
This is the professional who agrees to help in the sale of the home. Normally, you will deal with a real estate agent, but the agreement is with their company (the broker).

What the agent agreed to do:

Advertise your house to potential buyers.
Prepare and host showings or open houses.
Help you determine a price and walk you through offers and paperwork.
Represent your interests throughout the process.

What Does a Seller-Broker Agreement Include?

While contracts can be current or adapted, and addenda may be added, the following are some common real estate listing agreement terms:

Commission amount
Historically, the commission rate has been between 3% and 6% of the home's sale price, with your listing agent and the buyer's agent splitting it nearly 50-50. However, there is no defined relationship here, so expect some negotiation with your agent.

Whether you owe your agent a commission is also likely determined by the type of listing agreement in place and the services your agent provides – more on this later.

Listing duration
This tells you how long the agreement is valid till it expires and your agent no longer serves you. In most major real estate markets, it lasts three months, although it could vary longer or shorter depending on the health of your local real estate market.

Cancellation Clause
The cancellation clause outlines any penalties you will or will not face if you seek to end the contract before your agent successfully sells your house.

Responsibilities
This section specifies the tasks and services your agent will do. Professional photography, MLS a list, and broad marketing services are some common examples.
Look for references to a virtual or 3d tour, as this may help you attract more potential customers.

The agreement's provisions concerning the marketing of your house should also be examined. Will your house be listed on the MLS so that agents, brokers, and consumers may find it? Or does your agent want to market your house quietly so that only a small group of agents may find it? Reduced exposure to potential consumers could result in a slower sale at a lower price.

Dispute
These are guidelines for how concerns or disputes will be resolved. This might involve arguments over the listing price or methods of marketing.

Ownership
In this part, you declare that you own the home, have the right to sell it, and can legally transfer the title.

Expiration
This states that if the contract expires before the property is sold, the listing agent can provide a list of all purchasers who saw the home while they were the agent. It states that if one of those previous buyers returns after the contract ends and wants to purchase the house, the listing agent is still owed a commission within a defined time limit. It is also known as a holdover or carryover clause.

Dual Agency
This is when a listing agent keeps the entire commission since they represent both the seller and the buyer. It is against the law in many areas, and even when it is acceptable, there are restrictions imposed by both state and local professional bodies to prevent conflicts of interest. These partnerships also need complete disclosure and the seller's signed approval to this type of representation.

Can You Cancel a Listing Agreement?

Yes, but it all relies on what the contract states. Some agreements allow you to cancel at any time, whilst others may impose a price. If you're unsatisfied with your agent, contact them first. If it doesn't work, contact their company or seek legal assistance.

What to Look Out For
Some agreements are unfair and unclear. Watch out for:

Extended agreements are difficult to break out of
High penalties for early cancellation.
Agents who pull you to sign without answering your queries.
Take your time. Read the agreement carefully and ask questions if anything is unclear.

Understanding who are the parties to a listing agreement? is one of the most crucial aspects in preparing to sell your house. The two primary parties—the homeowner and the real estate broker or agent—have respective obligations that influence the sale's success. This agreement specifies everything from how your house will be promoted to the commission the agent will get.

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