What is a Listing Agreement?

($7,500) and 3% to the buyer’s agent ($7,500). Real estate commissions are negotiable.

Agent duties

These are your expectations of the agent and what you give them permission to do. For example, if you want your agent to hold open houses or list your home on an MLS (multiple listing service), you’ll grant them formal permission in this section. Understanding the agent’s responsibilities will give you a clear idea of what they will (and will not) do during the selling process.

Property description

The property description includes: Items included in the sale: Here you’ll find any personal property left behind after the property is sold. It often includes large appliances like washers, dryers, ovens, and refrigerators. Items not included in the sale: Anything you’re taking with you or getting rid of before the buyer takes possession of the home.

Agreement duration

The amount of time the realtor will represent you before the agreement terminates. Most real estate listing agreements include a default duration, but this is negotiable.

Some agents prefer a longer term (six months), but you may decide a shorter period would be better (three months). An agent may be willing to change these details if you’d like them to.

Conflict resolution details

This legal-heavy part of the document lays out how any potential disputes are resolved between the property owner and agent. It will probably specify whether conflicts are settled using mediation (a third party helps the parties reach an agreement) or arbitration (a third party makes the decision).

Odds are you probably won’t have to deal with a formal dispute. But it always helps to understand this section, just in case you need it down the road.

Protection period

A protection period, sometimes called a tail period, helps protect the seller’s agent from losing their commission. It stays in effect for a certain amount of time after the listing agreement expires. A protection period kicks in when the agent shows the house to someone during the listing agreement period, but that person doesn’t buy the home until after the listing agreement has expired. If there’s a protection period clause in the agreement, the seller would still pay the agent their full commission.

Type of agreement

Most agreements will specify one of four types of listings:

1.Exclusive right-to-sell listing

2.Exclusive agency listing

3.Open listing

4.Net listing

Read on to learn how each type changes your relationship with a real estate agent.

4 Types Of Listing Agreements

Listing agreements usually come in one of four types. Your agreement type is often listed at the top of the document itself. These names can vary based on where you live, so read the listing agreement closely to understand the specific contract you have with your broker or agent.

1.Exclusive right-to-sell listing agreement: The most common type of listing agreement. Exclusive right-to-sell listings give the listing agent and their brokerage exclusive rights to represent the seller’s home. The agent is entitled to their commission regardless of who sells the property, as long as the listing agreement is in effect.

2.Exclusive agency listing agreement: This is similar to an exclusive right-to-sell listing. The only difference is that an exclusive agency listing gives the seller a way out of paying a commission: by selling the home themselves. If they successfully sell the property on their own, they don’t have to pay their agent.

3.Open listing agreement: Think of an open listing as a “last agent standing” competition. This non-exclusive agreement allows the seller to use multiple real estate agents to sell their home. The agent who sells the home is the only one who gets a commission. It also gives sellers the power to try to sell the home themselves, even while other agents are trying to sell it too. If the property owner succeeds, the agents walk away empty-handed. For this reason, most real estate agents will be hesitant to sign an open listing agreement.

4.Net listing agreement: With a net listing agreement, the seller agrees on an acceptable home sale price with their agent. If the agent sells the home for more than that price, they get to keep the proceeds. Net listings are uncommon, and actually illegal in some states.

5 easy things to double-check (and triplecheck) before you sign a listing agreement

The entire listing agreement is important, but you can doublecheck five crucial details in a handful of seconds: