Here’s What You Need to Know About Listing Agreements
Perhaps you are thinking about putting your home up for sale. It is a good idea to educate yourself on the different types of listing agreements. Seek out a real estate agent with plenty of experience in the field that can help guide you through the process. When deciding how you will list your home, make sure to consider the status of the market and what is best for your particular situation. We are going to cover some of the most common types of listings and discuss what they entail. You will need to decide how to list your home based upon your unique needs and wants; your agent will be able to assist you with deciding the best approach.
An open listing happens when owners sell their property on their own with no help from an agent. There is no exclusivity, which means that the seller can list their property with multiple real estate brokers. The broker who finds a buyer who makes an offer that the seller agrees with will be the one who receives a commission. A huge perk to an open listing is that the seller will only need to pay one broker’s commission, which is much less than what they would pay in a typical sale. Eliminating the buyer’s agent means that the seller will make more money off of the sale. If the seller is able to find the buyer on their own, they won’t have to pay any commission to anyone. The only thing that they will need to take care of is closing costs and any real estate attorney fees.
Exclusive Agency Listings
In exclusive agency listings, the brokers represent the sellers and the seller can opt to sell on their own at any time and avoid paying a commission. The broker is also allowed to let another brokerage bring a buyer on. If another brokerage finds a buyer, the owner will have twice the responsibility. In this case, the broker representing the owner and the broker who closed the deal will be paid a fee by the seller.
Exclusive Right-to-Sell Listings
This is the most frequently used type of listing. The broker will get the right to gain a commission by advocating for the seller and also finding a buyer in whichever way they can. The seller will have to pay the listing fees and the fee for the broker who makes the sale. In this agreement, the owner does not reserve the right to sell on their own without paying a commission. In some cases, there are exceptions. For example, if the owner has an interested buyer, they might be given a certain amount of time to draft up a contract and have the commission waved.
Listing agreement terms are negotiable, they can be anywhere from one month to one year. You should inquire about your right to cancel to ensure that this is an agreement you want to get into. It is also worth mentioning that some agents and brokers will not allow you to cancel if you don’t wish to work with them any longer. Make sure you know what your options are in this regard so that you will be able to move on if you wish to. If you are able to get your agent or broker to agree to allow you to cancel at any point, the contract length is a non-factor. You should also consider how much you will be paying in commission fees. For example, if the market has many properties available and not so many interested buyers, your agent will have a much more difficult time locating a buyer that agrees to your terms. You might want to think about offering your agent a higher commission for their efforts. The listing agreement that you choose will largely depend on how you personally wish to sell your home and how you would like to be represented. Your choice also depends on your budget and how much you want to spend on this process. You will need to do your research and consult with an agent to fully understand all of the options available to you.