1to1house.com: information for selling houses
for top dollar... faster!

Listing Agreements

Make sure you read the fine print

Whenever you use a real estate agent or a flat fee broker, you will most likely sign a Listing Agreement. Make sure you read this important document BEFORE SIGNING IT.

In fact, real estate is loaded with documents that you'll need to sign. It always seems like at the time, that you don't have enough time to read these sometimes lengthy documents before you sign it. After all, these guys have been in business for years, they must be doing everything right-- WRONG!

Your first document that you'll be signing is the LISTING AGREEMENT. Listing Agreements aren't usually that long (only 4 pages or so!) However, before you sign this little agreement, make sure you understand what you're agreeing to-- it could cost you plenty.

Even though it is called an Agreement, it is actually a CONTRACT! Whenever you sign anything, it becomes a contract and you are obligated to the terms of the contract even if you haven't read those terms, or even understand those terms. You can not plead later that you just didn't understand what you were signing. That just doesn't fly!

What is a Listing Agreement?

The listing agreement is a contract between the seller and the listing broker. It sets out the conditions of the listing. While the details of the agreement should be negotiated, a listing agreement generally includes the following:

1. The length of the listing period -- as the seller you'd want to be able to switch brokers if the sale does not happen as quickly as you like, while the broker wants to have the listing period as long as possible, recognizing that it often takes a fair amount of time and effort and expense to generate other broker interest and a sale, and that if the time is too short s/he loses the commission.

2. The desired sales price, as well as a price that might be accepted;

3. The amount of the commission -- while the commission rate is generally claimed to be "standard" within a community, don't believe it, and it is sometimes possible to negotiate different rates up front -- such as 2% to the listing broker and 3% to the selling broker. However, if the rates are too low, the listing broker may not want to do all that is necessary to "push" your house, such as advertising it heavily, while the selling broker may prefer to sell her prospects a home that carries a higher commission than she'd get on your home.

4. Any exceptions to the commission. For example, would there be a reduced fee (or no fee at all) if you sell the house on your own, or you sell it to a friend who expressed interest? Generally the broker will insist on you naming any such persons in the listing agreement.
   

Negotiate any changes to the Listing Agreement before signing

If you don't like the terms spelled out in the document (more an that later), you have to make changes BEFORE SIGNING. Once you sign the document and then read it and want to make some changes, it will be very difficult.

Here are a few things you'll want to make sure are included:

You want to retain the right to:

Pull the house from the market any time before the time period expires. Some agreements require that you keep your house on the market for the duration of the agreement. For example, suppose you sign a 365-day agreement and decide in that first month to pull your house off the market, you would have to wait the full 365 days before you can sell it to anyone without paying the full commission. Circumstances change all the time. For whatever reason, you should have the right to pull your house off the market without being held ransom.

If for some reason, you're not happy with the broker you sign with, you would not be able to make a switch to another broker without paying a double commission.

You would think it would be obvious that you wouldn't pay a commission until the property actually went to closing and closed. But it is possible, depending on the Listing Agreement you sign, that if an agent brings a buyer willing to pay the asking price and for some reason you decide not to sell it right then, you would have to pay the commission, even if the property didn't close. You want to make sure the Listing Agreement states that the commission will be paid only out of the closing proceeds.

Even if you could never imagine things going bad between your good friend the agent, you still want to have a clause in the agreement that YOU can terminate the agreement if you decide to terminate the agreement. If you do decide to terminate the agreement, you'll probably have to do so in writing. Make sure the Listing Agreement includes a working fax number and address where you can send a termination letter should you decide.

These are suggestions that you should consider before signing the Listing Agreement. It is okay for you to make amendments to the agreement, in writing, that both the agent and you agree to.