You’re ready to sell your house and have a real estate agent to work with. Before your home is put on the market and added to MLS Listings you will need to sign a real estate listing agreement. This kicks off the selling process but is a legally binding contract.
Here’s everything you need to know about real estate listing agreements so you can have confidence before you sign on that dotted line.
What is a Listing Agreement?
A listing agreement is an employment contract in which a real estate firm agrees to find a buyer for an owner of real estate. The real estate contract can apply to a single-family home, condominium, town-home, apartment, unimproved land, or any other real property.
The purpose of the contract is to identify the terms under which the owner agrees to sell their property, address the duties of both the seller and the firm, and offer protection for both parties of the contract.
Types of Listing Agreements
There are three types of listing contracts.
- The most common is the Exclusive Right to Sell. This is preferred by most real estate firms because it ensures they will earn a commission regardless of who brings the buyer.
- Exclusive Agency Listing Contracts guarantee the firm will earn a commission if anyone other than the owner sells the property. If the owner sells it, they are not required to pay a commission.
- In an Open Listing Contract, the firm is guaranteed a non-exclusive right to sell the property. In this type of agreement, the owner gives other firms a listing contract on the same property. The seller is only obligated to pay a commission to the firm that produces a ready, willing, and able buyer the soonest. However, the owner still has the option to sell the property themselves and would avoid paying any commission.
Key Agreement Terms in Listing Contracts
There are several key agreement terms included in listing contracts. One of the most important terms is the price the seller is willing to sell the property. Here are a few other terms of sale required and recommended for sellers in their listing contract.
#1: Property Description
Every listing agreement includes a description of the property to be sold in the agreement terms. The listing contract provides a specific property description that clearly distinguishes the property from others.
#2: Brokerage Fees
The brokerage fee is typically a percentage of the sales price, but it can also be a flat fee. Often in real estate, the seller or property owner pays their broker a commission for representing them. Your broker will often disclose their fees to you before you sign a listing agreement.
#3: Contract Duration & Expiration Date
The duration of the contract is one more term in the listing agreement. The state of North Carolina requires every listing contract to have an expiration date. If you see a pending or expired MLS listing, this might be why!
If the seller termites the contract prior to the expiration date, they are still legally responsible to the firm. Automatic extensions of a contract are prohibited in North Carolina.
An additional period of time, after the contract expires, is established. This term protects the firm from the possibility of sellers and buyers waiting until the contract has expired to close the deal and avoid brokerage fees.
#4: Excluded List of Personal Property
The listing contract must list all personal property that will convey with the sale and any fixtures excluded from the sale. Personal property items include appliances and fuel. Fixtures are items permanently attached to the property.
Examples of fixtures include:
- Ceiling fans
- Basketball goals
- Planted trees
- Alarm systems
- Any leased items
Removing personal items is a basic part of home staging and a vital step in preparing your home for sale!
#5: Establish an Agency Relationship
Within the listing agreement, real estate agency relationships are established. The seller must permit or prohibit the firm from practicing dual agency.
Compensation and Cooperation is a term in the listing contract that explains how or if the listing firm will interact with other firms. Seller and Firm duties are also important terms listed in the contract.
828 Real Estate helps sellers have sound advice when setting an asking price or navigating listing agreements. If you have any questions about signing your listing agreement before contracting your home for sale we will be here to help. Contact us to navigate your agreement with a pro!
