The listing contract: What's
it all about?
decided to sell your house, you've painted and polished, you've interviewed listing
agents, and settled on an asking price. Now it's time to sign a listing contract.
"A listing agreement is really an employment contract
between you and the person you're hiring," says Diane Saatchi, senior vice
president of The Corcoran Group in East Hampton, N.Y. "You want to be clear
what everyone's job will be; they want to be clear what they'll be earning for
the contracts vary from state to state, some things are fairly standard. You should
expect to see the following:
description of the agreement. There are three basic types of listing agreements,
says real estate attorney Neil Garfinkel, a partner in the New York-based based
firm of Abrams Garfinkel Margolis Bergson, LLP. The most common is called an exclusive
right to sell, or an exclusive listing agreement. This means that you give just
one company the right to sell your house, as opposed to having signs from four
different real estate agents in your front yard. In an exclusive listing, the
broker gets the commission no matter who brings the buyer to the closing table.
In an exclusive agency listing, you list the house with just one agency. If they
sell it, they get the commission. If you wind up selling it on your own, you don't
pay a commission. The final variation is an open listen, which means you can sign
up with as many real estate agents as you want to sell the house. It doesn't happen
very often and most Multiple Listing Services generally don't allow it.
What's included or excluded
in the sale. It sounds simple, but it can get technical,
says Elizabeth Marquart, a Realtor with Sotheby's International
Realty in Beverly Hills, Calif. Generally, furniture is excluded
and fixtures are included in a sale. A fixture is anything that's
attached to the walls, including curtain rods and window coverings,
light fixtures, chandeliers, cabinetry, built-in desks and bookcases,
and built-in appliances. But these days, lots of stuff is attached
to the walls, including things you might like to take with you,
such as your to-die-for plasma screen TV. Spell out what stays and
The listing price and terms.
This is your initial asking price, the starting point of
all negotiations with buyers. You'll also include here any incentives
you might offer, such as offering financing to a buyer, paying closing
costs, offering a home buyer's warranty, or giving a bonus to an
agent. Keep in mind: You are signing a contract that says you will
sell -- and pay the brokerage commission -- at the price and terms
stated. In other words, if the agent brings a buyer who agrees to
the exact terms spelled out in the listing agreement refusing to
do so will likely land you in legal hot water and liable to pay
the commission anyway.
Services to be performed.
This says what the agent will be expected to do for you,
says Sharon Kirkland, broker manager of the Delray Beach, Fla.,
office of Illustrated Properties Real Estate Inc. Those services
include advertising the property, listing it with the Multiple Listing
Service, showing the house, presenting all offers and counter-offers
in a timely manner, and assuring that information you give the agent
will be kept confidential unless you waive that confidentiality.
It also will list other services to be performed, such as having
the yard mowed until it sells.
Compensation. In all
states, the commission is negotiable. In California, contracts state
in big, bold print that the commission isn't fixed by law, Marquart
says. That means the 6 percent the agent often seeks isn't carved
in stone. This section also says you agree to pay commission to
both your agent and the buyer's agent, and you authorize your agent
to cooperate with other agents for a specific percentage. In plain
English, if you're paying your agent a 6 percent commission, he'll
split that with the buyer's agent. There's often a provision for
a reduced commission for a seller who finds a buyer on his own.