Listing Agreements

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You made your choice and decided to sell your home. You've interviewed the agents and found the right one, now it's time to get everything into action! Your agent will present and go over a  listing contract with you. While there are several different options available, depending on your situation, the most common type is an "Exclusive Right To Sell". As the name implies, this type of contract give the listing agent the exclusive right to list market and sell your property with you.

Most likely there will be other agents involved on the buyers side of the transaction, but they are representing the buyers and your agent is the one representing you. There are several parts to a listing contract and each state is slightly different from the others but the basic information will be mostly the same. Some things you will see on the contract:

  • The agent's name and the name of the brokerage they work for
  • The property description
  • listing price
  • dual agency showings disclosures
  • agreed upon commission rate and split
  • How the home will be marketed
  • other state specific information

Your real estate agent will go over the entire contract with you to make sure that you understand each section  and know exactly what it all means before you sign on the dotted line. The first two, on the above list are pretty self explanatory, and the listing price has already been discussed in the CMA (Competitive Market Analysis) but this is where you and your agent will put down the specific listing price that you want to put your home on the market for.

The dual agency showings disclosure, included in most state listing contracts as a standard  section, allows you to decide if you do or do not want your agent to bring people to the see the house that they are also representing as buyers. This does not give consent for your agent to  practice dual agency for an offer, just for a showing.  For them to make an offer with buyers they represent (dual Agency) that requires another discussion as well as disclosure form that all parties agree to. For more information about dual agency and what that means for you talk to your real estate agent, they will be happy to explain it in greater detail.

The commission section is the one section that most homeowners, when they are getting ready to sell, pay the most attention to. This is one that impacts your bottom line when the house gets sold. Your real estate agent will go over in detail how the commission is set up and  how it will be split. When you decide to list your home the commission is how the listing brokerage gets paid. This is due when the house closes and is typically taken directly from the proceeds of the home sale (every situation is different).

When a buyers agent brings a buyer  to your home they also typically get a portion of that as well. That doesn't mean that you are paying more. The listing agent will pay the buyer's broker with a portion of the amount you had agreed upon. There are several ways this happens, be sure to talk to your listing agent about the "split" and what that looks like and how it will work in your situation.

You will also se a section that spells out what you should expect from your agent as fars marketing showings and what they are going to do to help you achieve your goal of selling your home. This will include things like photos, online advertising, video, assisted or unassisted showing, listing syndication and more. If you have any questions or specific things you would like to happen this is where you would specify that with your real estate agent.

Each state will have other required sections and disclosures  so be sure to ask questions if you don't understand part of the  listing contract. It is always better to understand upfront what will be happening, rather than being disappointed later on over a misunderstanding. A good real estate agent will be happy to explain everything to you.

 

Is Exclusive Right To Sell The Right Choice For Me?

Exclusive right to sell gives homeowners the comfort of knowing they are getting the full service and attention from their real estate agent. with this type of listing agreement, the brokerage is guaranteed to paid for their efforts and will be able to recoup the money and time they invested into marketing and selling your home. This type of agreement allows your agent to list the home in the MLS, hold open houses and market the property to agents and potential buyers fully.  While there are other types of listing contracts, and your real estate agent will gladly explain them to you, they are set up for specific situations like showing a For Sale By Owner  property or other real estate situations that arise occasionally.

When and How Do I Pay My Listing Agent?

Your real estate agent is going to work hard on your behalf to market your home, attract buyers help you negotiate the offer to get the best deal for you, and make sure all of the required disclosures and other documentation is in place. They will be with your right up to the close of the sale and after should the need arise. When and how do they get paid?

Real estate agents get paid based on the commission that you agreed to in the listing contract beforehand. Typically this is a percentage of the sale price of the home, although there are other less common options. Since most of the time there will be two agents involved in a deal, Your listing agent and the buyers agent, the commission that you agreed to in your contract is shared or "split" between them.  The amount each side gets is called "the split". The commission is paid to the real estate agents brokerage and a portion of that is shared back to them from the broker as the amount that they receive for the job they did for you.

When do I own the commission?

You hired the listing agent to bring you a "ready, willing, and able buyer" to you. When you reach an agreement with a buyer and and the financing and contingencies have been met in the contract, the listing agent have fulfilled their portion of the contract and has earned the commission. That's not when they get paid though, so don't worry your not shelling out cash before the home closes. After the deal has closed and everyone has signed on the dotted line the agents involved will be paid from the proceeds  of the sale.

What happens if the buyer backs out at the last minute?

Don't worry about that either. If the buyers financing falls through or they suddenly back out of the deal and you have to put the home back on the market, you do not owe commission at that point. They were not a "ready, willing and able buyer". Your agent will earn the commission when they bring another buyer and it goes through to the end.

What happens if I back out at the last minute?

If your agent fulfills their duty and brings a "ready willing and able buyer", and you as the seller back out of the deal, you may own the commission. They have done the job that you hired them to do and have earned that commission. The important thing is to make sure that you really want to sell your home for the price and stipulations that you agreed to in the purchase and sale that you sign with the buyer and what what agreed to in your listing agreement.

 

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