What kind of listing agreement are you signing?

On Behalf of | Sep 19, 2023 | Uncategorized

Signing a listing agreement with your real estate agent is a critical step when you’re selling your home – but be wary. What you’re signing is a legal contract, and its terms and conditions are enforceable.

That means you need to carefully review each section of the agreement and make sure that you understand what it says – and what that means for you. Start by looking at exactly what kind of listing agreement you’re making.

What kind of listing agreements are there?

The National Association of REALTORS® (NAR) endorses three different kinds of listing agreements:

  1. Open listings: This means your agreement isn’t exclusive. You can place your listing with as many real estate brokers as you want, as long as they’ll work with you – and you only pay the broker if and when they find you a buyer with an acceptable offer. You also reserve the right to find a buyer on your own, which means you’d pay no commission on the sale at all.
  2. Exclusive agency listing: This means that you’re only placing your listing with one agent, which means they’re the only agent you can work with while the agreement is in effect. Like an open listing, however, you still retain the right to find a buyer on your own – so if your co-worker suddenly makes you an offer you’re willing to accept before your realtor comes through, your realtor loses out on the commission.
  3. Exclusive right-to-sell listing: This is the most common agreement. The listing broker is given the exclusive right to market your home for you, and they earn a commission no matter how the sale happens. Even if your best friend decides that they want to buy your home, you still have to pay the broker’s commission on the sale. (You can build exceptions into the contract for certain scenarios, but that’s not usual.)

A good real estate agent is a tremendous asset in any home sale – but a bad one can be a nightmare. Don’t let anyone rush you into an agreement you aren’t ready to sign. Remember that signing a listing agreement is a significant commitment, so take your time to read and understand all its terms and seek legal guidance if necessary.