Also referred to as a listing agreement, the listing contract gives a licensed real estate professional authorization to act on your behalf in the sale of your Florida home. Listing contracts come in all shapes and sizes, but there are characteristics which are common to all of them.
The elements of a valid real estate listing contract include:
- In Writing - All real estate contracts must be in writing and signed by the parties.
- Employment - The listing contract is a personal services contract between you and the real estate broker. It contains all of the terms and conditions of employing the broker and authorizing them to represent you in marketing and selling your Southwest Florida home. Remember, the agreement is "not" between you and your agent, but the broker who represents your agent's realty firm.
- Compensation - For a listing contract to be valid there must be compensation. The contract will specify the amount and timing of payment to your broker. Typically, payment is an agreed upon percentage of the sales price and payable at closing. It is important to note that your obligation to pay your broker may not absolutely depend on a finalized sales transaction. For example, if the broker finds a bona-fide buyer who is willing to pay your asking price and agrees to the terms you have offered, but you then get "cold feet" at the last moment and decide not to sell, the broker has done his job and is entitled to be paid under the terms of the listing contract.
- Title - All listing contracts will ask who has title to the property. The property cannot be sold unless each party holding a title interest is a part of the listing agreement and the sales contract.
- Termination Date - You shouldn't sign any listing contract without a specific termination date. The usual duration is 180 days, but in many areas, or for more expensive homes, it is not unusual for listing contracts to be a minimum of one year. If the contract has an indefinite duration such as - until sold, or no duration specified at all, don't sign it. The listing contract is a legally binding document and you don't want to get locked into one with no clearly defined termination date. If the contract expires before your home sells and you still want to keep using the same broker, you can simply sign a new listing contract.
There can be, and often are, other elements to a listing contract. They might include special agreements as to commission amounts paid if the home is sold "in-house," meaning the listing agent (or another agent in the same firm) also sells the property, or who might pay advertising expenses, etc. As with any legal document, you should read the listing contract very carefully and be sure you understand exactly what you are agreeing to do with your Broker. If you have any questions about your listing contract it would be wise to seek legal advice for more clarification.
Examples of Listing Contracts
Exclusive Right to Sell Listing
This is the most popular type of listing between sellers and brokers. Under a exclusive right to sell listing contract, the broker is the "only" one authorized to sell your home. If another agent finds a buyer, your broker earns a commission. If you find a buyer on your own, your broker still earns a commission. This arrangement gives your broker the most incentive to spend time, money and energy marketing your home, especially to the other agents in the area who can show your home to their buyer clients. Only with an exclusive right to sell agreement can you expect to get a "full service marketing" effort from your broker, since it is the only listing type that assures a broker will get paid for his marketing expense and efforts when the home sells.
Exclusive Agency Listing
This is similar to the exclusive right to sell listing, with the significant difference being that you reserve the right to sell your home yourself and not pay the broker a commission. The broker only gets paid if your home is sold by a licensed real estate professional. If you find your own buyer and sell the home yourself, you pay no commission. On the face of it, this might sound like an attractive arrangement. However, it's not a popular listing type with brokers for a very good reason. Under an exclusive agency agreement, the broker is exposed to the risk of putting forth considerable time, effort and expense marketing your home, only to come away empty handed. The attraction to the seller for this type of contract is the possibility of finding their own buyer and not paying a commission. This puts the seller and broker in competitive roles, which usually isn't in the best interest of either party. Since the broker stands a good chance of not reaping any reward, it's unlikely that any major effort or expense will be put into marketing an exclusive agency listing.
One Time Showing Agreement
This is an agreement whereby a For Sale By Owner (FSBO) agrees to let an agent "show" their home to an "interested buyer" and then pays a "reduced" commission to the broker, if the showing results in a sale. The purpose of this agreement is to prevent the seller from dealing directly with the buyer that an agent introduced to the property in order to avoid paying any commission at all. Again this type of agreement offers very little incentive for a broker to bring "other" buyers to your property.
For more information on this real estate topic, please feel free to contact us directly. Our associates will be more than happy to assist you in answering any and all questions you may have.
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Page Authored by Benjamin Dona of Gulf Coast Associates, Realtors
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