Benefits of Listing Agreements
A listing agreement is a contract to employ a real estate broker to act as your representative, or legal agent, in selling your property. This employment contract between an agent and you (the seller) creates an “agency relationship.”
Three basic types of listing agreements are used in most states:
Open Listing (Non-Exclusive)
The open listing simultaneously authorizes more than one agent to sell your property, and allows you the right to sell the property yourself without paying a commission. Essentially, the first agent with a buyer earns the commission. Brokers discourage this type of listing because of its uncertainty and potential expense to them. An open listing can be terminated at any time.
Exclusive Right to Sell Listing
This is the most commonly used agreement. It entitles the listing broker named in the agreement to a commission even if another agent or the owner sells the property. The contract usually promises to pay the commission after the listing period expires only if the broker introduced the buyer to the property during the listing period.
The exclusive agency listing entitles only the listing broker to collect a commission. However, the owner still has the right to independently sell the property without paying a broker’s commission.
In general, a listing may be for any length of time, although brokers typically try to keep a listing for at least 90 days. If no beginning date is specified, the effective date is the date when the listing is signed. In addition, both types of exclusive listings must have definite termination dates.
All real estate listing agreements or contracts should be in writing, and must be in writing for the broker to collect a commission.