Selling a home with an agent requires you to sign a contract that includes terms that may be foreign to you. Here’s our guide to help you understand the details of listing agreements.
The seller listing contract
Agreements between sellers and the real estate agents they hire to list and sell their homes vary in many respects. But each such contract will spell out the duration of the agreement, the compensation the broker-agent will receive, and the extent of exclusivity.
- The most common contract is the “exclusive right to sell” agreement. If you sign this type of agreement, you are contractually obligated to work only through the agent. The agent will get paid regardless of whether she finds the buyer or another agent brings him to the table.
- “Exclusive agency” agreements are rarer. You as the seller get the benefit of a professional listing, but the agent does not have the exclusive right to be paid. If the agent finds the buyer, he gets paid, but If you do, you don’t have to pay the agent.
- “Net listing” agreements state that the agent must sell for a minimum set price. If the house sells for more, the agent keeps any difference. This type of listing creates conflicts of interest and is illegal in many states.
- A pocket listing means the agent doesn’t put your home on the Multiple Listing Service (MLS). Instead, the agent has a network of buyers to whom he will market your property. The advantage of this type of agreement is that the agent will be showing the home only to buyers who are viable candidates. The disadvantage of a pocket listing is that it keeps other agents from seeing your house, including those whose clients are looking for a home just like yours.
- An open listing agreement doesn’t involve an actual contract. The home seller lets buyer’s agents present the home to their clients. The buyer’s agent whose client buys the property will expect a negotiated commission upon sale. This is best suited to the “For Sale By Owner” seller.
Related – How to Hire the Right Listing Agent