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The listing contract: What's it all about? -- Page 2

Compensation part 2. You'll see a section that says if you cancel the contract with your broker and then sell your house within a certain period to someone the broker brought to see it, you still have to pay the broker's commission. That period could be a month, or it could be a year.

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Authority to list the property. This allows your agent to submit information on the property to the Multiple Listing Service, or MLS. Occasionally, sellers don't want a house listed on the service, which is a database of houses on the market, and can be seen by real estate agents all over the place. But for the average seller, listing with the MLS is a given. It gives you maximum exposure to prospective buyers.

No guarantee of a sale. This part says that the contract is an agreement to market the property and submit the information to the MLS, Kirkland says. It's not a guarantee that the house will sell in a certain amount of time, or at all.

Seller warrants and representations. It sounds ominous, but it's just legal jargon. It covers such things as you assuring that you are the owner, you haven't listed the house with anyone else, and you're not aware of any delinquent taxes on the property, pending litigation or court judgments, bankruptcies or special assessments, Marquart says.

Deposits. When a buyer makes an offer on your house, he writes a check for a deposit. Deposits are designed to keep buyers serious about the purchase; if they pull out of the deal without a good reason, they lose their deposit. This section explains that deposits are held in escrow (a special account set up to hold money related to the purchase) until the closing. "You can't go shopping with it," Marquart says.

Agency relationship. This part states the legal relationship between the seller and the broker. Just several years ago it was pretty cut and dried -- all agents worked for the seller and owed their "fiduciary" to the seller. But in recent years the nature of these relationships, and the laws requiring disclosure of them, has been in a constant state of flux and varies from state to state. It may, however, state that it's possible that the broker could wind up representing both you and the buyer. That's a nice cash flow situation for the broker, but could be a little weird for you because you and the buyer have completely different goals. It basically means that if this happens, the agent is required to have the same standards for both sides.

Security and insurance. This portion says that the broker and the agency aren't responsible and they're not insured if your personal property is lost or stolen while the house is being shown. Sellers have a habit of leaving Palm Pilots, iPods and cell phones lying around the house, Kirkland says, not to mention cash, jewelry, credit cards and the ever popular prescription drugs.

Lock boxes. Do you want to use one or not? The decision is based strictly on local practice, and the comfort level of the sellers. Some neighborhoods frown on them; others insist on them.
(A lock box is a metal box the agent puts on your door that contains a key so you don't have to be home for someone to show the house.)

Yard signs. Again, some people don't want a sign in their yard -- and some cities and homeowner's associations have rules about their placement, size and color.

Fair Housing Act information. This part says you're going to sell to anyone who brings you a valid contract and not discriminate on the basis of religion, gender, race, nationality, sexual orientation or disability. "Should the seller accept photos and letters from prospective buyers?" Garfinkel says. "Absolutely not." If two offers are made and the seller picks one over the other and the photos could be used as evidence they discriminated.

Disputes. This will spell out how disputes will be handled, such as the payment of attorney's fees or agreeing to mediation and arbitration instead of going to court.

Terminating the contract. This covers how a customer or the broker can get out of the contract. It will vary by company. Some will say either party can terminate the contract with written notice. Others say a contract is a contract; we'll remove the house from the MLS, but if it sells anyway during the contract period, they still get the commission. This is one of those negotiation points.

 
 
-- Posted: May 16, 2005
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