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Real Estate Listing Agreements: Which One Is Best for You?
If you are thinking of selling your house through a real estate agent, aReal Estate Listing Agreement will be one of the first documents you sign. A listing agreement is a legally binding contract that identifies the extent of the roles and and responsibilities between you and the agent. Although aReal Estate listing Agreement can vary from place to place, a commonpractice among listing agents to use boilerplate, industry standard forms.No matter which agreement you decide to sign, read it carefully or considerhiring a legal representative if you need to. Remember everything on a RealEstate Listing Agreement is negotiable. Common Real Estate Listing Agreements There are three common listing agreementsor contracts, and the one you sign will determine the level of service,rights and responsibilities that both you and your agent will agree to overa set period of time. Exclusive Right to Sell Listing Agreement -The Exclusive Right toSell Agreement is the most common listing contract. The agreement gives theselling agent an exclusive right to list and sell your home for a set periodof time. The commission you pay the agency will come at the time of closingand is usually take out of the proceeds from the sale. - The agreement applies even if you find the buyeryourself.
- In the event that an agency other than the listingagency sells the home, the listing agency typically splits its totalcommission with the second agency.
Exclusive Agency Agreement - Almost identical to the Exclusive Rightto Sell Agreement, the Exclusive Agency agreement allows the seller toretain the right to sell the property without paying a commission if thebuyer was not introduced to the property by the agency. In the event that an agency other than the listing agency sells the home,the listing agency typically splits its total commission with the secondagency. Open Listing Agreement - An open listing agreement gives no singleagency exclusive right to sell the property. The seller can sell it himselfwithout paying a commission to anyone and can he can sign the agreement withmore than one agency. If the seller does pay a commission, it's to the selling agency only. Nocommissions would be shared in an Open Listing scenario. Common Terms to Consider in Listing Agreements Term of the Agreement - The term of the agreement sets the amount oftime that your agent will represent you and market your home. The longer theagreement generally benefits the agent because it provides more time to finda buyer for your house. In a weak market that may be okay, but in a sellersmarket, you may not want to commit your self to one agent for an extendedperiod of time. but if homes are selling quickly, you don't want to becommitted to one agent for more than a few month. Consider how long home inyour area are typically on the market before they close when considering howlong to lock yourself into a listing agreement. If the house doesn?t? sellwith the agreed time, you can always extend the period of time if you aresatisfied you?re your real estate agent?s work to date. Commission -Commissions are negotiable. The industry standard isusually between 5% to 7%. Some real estate agents or agencies have policiesnot to negotiate significant reductions in their commission schedules. Wheninterviewing agents compare what services each offers and compare whatcommissions schedules the agent is willing to work on. A higher commissionrate doesn?t always mean that the agent will market you house moreaggressively or more effectively than a discount commission broker. As thecommission rate can save you thousands or tens of thousand of dollars,understand what services your will receive for the amount of money you willpay at closing. Buyer?s agent can find out how much commission is offered onyour home through the multiple listing service (MLS). Multiple Listing Service (MLS) -A listing agreement commonlyauthorizes your agent to post your home in the MLS. There are few reasonswhy you wouldn?t want you home posted to the MLS as it is the single bestway for other agents and buyers to find your home. Most MLS listings arepicked up by Internet real estate directories that can be searched byconsumers. Regional MLS systems often overlap into popular neighborhood. Understandwhich MLS systems your agent will list your home and what timeframe it willbe listed. Also check to make sure the MLS systems where your home will belisted will also be picked up by the popular Internet search engines. Thepublic does not have access to all the all the data that agents and brokerscan access. Which Agreement Is Best for You? Most agencies offer only the ExclusiveRight to Sell agreement. Before getting paid themselves, a good realestate agent spends a great deal of time and money marketing and closingtheir listings. The Exclusive Right to Sell agreement protects thereal estate listing agent?s investment when marketing houses. Signing an Exclusive Agency agreement can be tricky because it leaves you theoption of selling the house yourself. In reality, the seller rarely finds the buyer herself. But when it doeshappen, there is the problem of which party gets the credit. Did the buyerbecome aware of the house because of the sign out front or an ad on theInternet? Signing an Exclusive Right to Sell solves this problem. An Open Listing agreement will allow you to sign with many differentagencies, but there is little motivation on the part of a listing agent tomarket the house since a commission is only paid to the selling agent. Jeff Morrow
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Real Estate Listing Agreements -Which one is best for you?
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