Financial Answer Center
- Introduction
- Plan Your Program. Start Early
- Should You Sell?
- Steps before the Listing
- Selecting a Real Estate Agent
- Listing Contracts
- Real Estate Commissions
- For Sale by Owner
- Getting an Offer
- Negotiating Items
- Entering Into a Contract
- Hiring an Attorney
- Financing the Deal
- Seller Financing Alternatives
- Before the Closing
- Home Inspection
- Sample Closing Costs for Items Paid by Seller
- The Closing
- Bridge Loans
- Taxes
Once you've located a real estate professional with whom you feel comfortable, your next step will be to enter into a listing contract. This contract will appoint a broker and his or her agents as your agents in seeking a buyer for your home. You enter into this contract, which can be either exclusive or non-exclusive, for a set period of time. This is a legally enforceable document.
SUGGESTION: Before listing your property, decide on what will be sold with the home and what is not included. This is especially important for items attached to the structure such as chandeliers. When discussing terms with your agent, make sure they know that these items are excluded from the sale. When you ultimately enter into a contract with a buyer, these exclusions will need to be spelled out there as well.
Exclusive Right to Sell Contracts
Under the terms of this type of contract (the most common), the listing agent earns a commission no matter who sells the property—this includes you. The broker has the exclusive right to market the property, and represents you exclusively. However, the brokerage agrees to cooperate with other brokers, allowing them to show the property and agreeing to share the commission with them.
IMPORTANT NOTE: If you're part of an employer-related relocation, make sure you are not obligated to pay a commission to an agent if your company ends up purchasing your home because you can't get your price on the open market. If this provision applies to your relocation agreement, amend your listing contract before signing it.
Exclusive Agency Contracts
Under the terms of this type of contract (the most common), the listing agent earns a commission no matter who sells the property—this includes you. The broker has the exclusive right to market the property and represents you exclusively. However, the brokerage agrees to cooperate with other brokers, allowing them to show the property and agreeing to share the commission with them.
Open Listing
This type of agreement is most prevalent in areas where Multiple Listing Services are not available. Any agent can show or sell your home, and you agree to pay a commission to the first one that produces an acceptable buyer. If you sell the home yourself, you don't pay a commission to anyone.
No matter which type of listing you enter into, try to limit the period of the contract. If you are dissatisfied with the agent you have selected, you won't be married to them for too long. A three-month listing contract is fair to you and the agent.
SUGGESTION: Negotiate a clause that specifically allows you an "early-out" provision if you feel your agent is not doing a good job. You'll need to define the terms and you may still be responsible for certain costs. Having this escape hatch is useful if you become unhappy with your service before your contract is up.
IMPORTANT NOTE: Most contracts contain protection clauses that prevent you from completing a sale on your own that begins before your listing contract expires. This protection period, which lasts anywhere from 30 to 60 days, protects the agent from losing out on a commission they worked to complete solely because the listing agreement terminates.
