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.