Your Agent Home Selling Agreement
June 3rd, 2011
It Is An Employment Agreement
In the simplest terms, the listing contract is an employment agreement between the home seller and the broker. They have chosen this agreement to describe the seller’s intentions, and the seller gives approval to begin the home selling process under certain conditions spelled out in the agreement. The price, what items are included or excluded, any terms, occupancy, how long the sellers are willing to place the home for sale, and other conditions the sellers are requesting are made a part of the listing agreement.
Entry Into The Multiple Listing System
Typically the seller lists with one company through the “listing agent”. The contract also spells out the broker obligations and intentions, including the agreement to cooperate with other brokers and their agents to help gain exposure for the home. If the sale results through the efforts of one of the cooperating companies, this is commonly called a co-op sale. In most communities the listing company actually sells the home less than fifty percent of the time, so co-op sales are an important part of the selling process. Always verify the property is being included in the MLS system from the very beginning of the listing. Agents that promote “pocket listings” may not have your interests at heart. The listing agent’s income doubles if they also produce the buyer. The question is: Were other buyers in the market willing to pay more? You will never know if the home was not exposed to the entire market.
Common Listing Clauses
To help you prepare for listing your home, here are the most common provisions in listing agreements around the country and the provision’s purpose:
- Commission or fee – the seller agrees to pay a success only fee if the broker produces a buyer
- Prospect registration – the broker is “protected” if a “registered” prospect buys after expiration
- Seller warranty – seller warrants there are no defects or disclose any defect they are aware of
- Brokers obligations – the work, tools and effort the broker agrees to put forth to produce a buyer
- Broker cooperation – broker agrees to allow other companies agents to show and sell the home
- Fixtures and personal property – what stays and what does not stay with the house
- Listed price – the price at which the seller and broker agree to offer the home for sale
- Identification of the property – exactly what property is being sold?
- The terms of sale – occupancy, minimum earnest money, rent seller pays after closing, etc.
- The broker’s fee and how it is calculated – there are numerous ways to calculate fee exceptions to the listing
- Period of time the contract is in force – this is a negotiated term Identifies the parties to the contract and how to reach them
- Broker and seller will abide by Fair Housing Laws – to insure the parties are aware of the law
- Which party holds the earnest money – if things go wrong, what happens to the earnest money?
- Seller will turn over any leads they acquire during the listing
- What happens to earnest money if buyer defaults–the broker generally receives a portion of it Clarification of provisions from the offer to purchase document – anticipating an offer will come
Make Time To Examine The Contract Before Signing
To familiarize you with the contract in your area, we recommend you request a copy of the listing contract and review it prior to meeting with agents. This way you have the time to focus on the meaning of the wording in the agreement itself, a scenario that rarely plays out that way in the “listing presentations”. Take notes on your questions. You can then have the agents you interview answer your questions. This is an opportunity for you to experience the agents actual work. If agents have different answers to the same question, this is where you can focus on the quality and sincerity of their answers.
A Listing Myth
The term of the listing agreement is typically influenced by the areas average time on market. If it’s taking 120 days from list date to sale date on average, it may be difficult to convince the agent you’ve selected to agree to a short-term agreement. It is a myth that by putting the agent on a “short leash” it will cause them to work harder on your home or that the home will sell faster because the listing term is short. A far better strategy is to make certain the home “sparkles” and is in good condition and that it is priced to compete against other homes for sale in the neighborhood. For more information check out the other pages about value or the selling process. Or ask me your questions and I will answer you.