What Is a Listing Agreement?

What Does a Real Estate Agent Do?

A real estate agent can perform many tasks to make the selling process smoother. They will help you determine a fair listing price that accurately reflects the home’s value based on the rates in the local housing market. 

The realtor will also create a marketing strategy, including online listings, print materials, and even social media. Agents use proven tactics that the National Association of Realtors recommends to ensure a successful sale. Many help with financial planning or can tell you what a broker’s duties are.

When buyers show interest during the listing period, the real estate agent helps schedule private showings or an open house. If offers are made for the home, the agent negotiates for a fair deal on the seller’s behalf. Finally, they play an important role in facilitating the closing process. 

The Agency Relationship

You will enter into a legally binding contract when you hire a realtor for an exclusive agency listing. Part of this contract outlines the agency relationship between you and the agent. This professional will have a fiduciary responsibility to act in the seller’s best interests throughout the sale process. 

The Listing Agreement

The contract you sign is called the real estate listing agreement or listing contract. It is a legally binding agreement that outlines the terms of the relationship and the agent’s responsibilities for marketing and selling the property. A listing agreement signals you agree to pay the agent for their services as they facilitate the sale. Other common items include: 

• When the listing agreement expires
• Marketing obligations, such as creating a property description
• Clauses in case of a legal dispute, such as mandatory mediation
• What the seller pays
• The seller’s duties
• Whether you’ll work with one agent or several
• A termination clause if you find a different agent
• A protection period against legal disputes
• How long the open listing will last

Most contracts are used to establish a formal relationship and clearly state each party’s responsibilities. They should state a specific time period that signals when the contract expires, too. 

Types of Listing Agreements

A listing agreement with a real estate agent can take many forms. The type of listing contract you sign will affect how the agent sells the home and what services they will be paid for. There are multiple types of listing agreements.

As a seller, you may sign an exclusive right-to-sell listing agreement with your agent. This gives the realtor the right to sell the property and earn a commission, regardless of who finds the buyer. That means if the seller finds the eventual buyer the agent would still be owed a commission because of the right to sell listing contract clause. 

An exclusive agency listing agreement is slightly different and gives the property owner more freedom. The agent still has the exclusive right to sell the home, but the seller can also facilitate the sale themselves without paying the agreed-upon commission. 

The other type of listing contract is an open listing agreement. This non-exclusive contract allows multiple real estate agents to list the property and attempt to market it. Whichever agent secures a buyer for the property will receive the commission fees, while the other agents do not receive payment. These help a house sell quickly.

Key Elements of a Listing Agreement

Since a listing agreement is a legal document, it includes much information. Sellers need to understand everything contained within the listing agreement so they know the agent’s responsibilities and the nature of the relationship. Here are some key components of a typical listing agreement that every property owner should know about. 

Property Details and Asking Price

The listing agreement will include a detailed description of the property being sold. This includes features like the address, the number of rooms, the number of bathrooms, material defects, repair concerns, zoning information, and other disclosures. The initial listing price for the property will be included in the listing agreement.

Listing Term and Duration

A listing agreement is typically not permanent. The agent will have a certain amount of time to market and sell the property. Typical listing durations could be 90 days, six months, or one year. These terms are negotiated between the seller and the real estate agent. 

The listing duration often depends on the property’s condition and the local market. For example, a slow housing market may result in a listing agreement that lasts six months rather than 90 days since the agent will need more time to find buyers. 

Agent’s Commission and Fees

When you sign with a listing agent, you will settle on their commission fee in the listing agreement. This is typically a percentage of the final sale price of the home. However, some agents may charge a fixed fee instead. 

Once the sale is finalized, the sales revenue will cover the agent’s and their broker’s commission fees. Often, sellers also pay the commission of the buyer’s agent. Remember that this typically costs 5-6% of the home’s sale price. 

Marketing and Advertising Strategies

Your listing agreement with a real estate agent will lay out the marketing strategy for the property. For most agents, this will include a page on a multiple listing service (MLS), open houses, networking with other agents, printing physical materials, and social media advertising. 

Seller Responsibilities

Another component of the listing agreement is the seller’s responsibilities. The contract may detail your obligation to maintain the property, provide access for showings or open houses, and cooperate with the agent. The contract may include a communication plan. 

Negotiating a Real Estate Listing Agreement

Whether you are planning to sign an open listing agreement or an exclusive right-to-sell contract, it is essential to consider your best interests when hiring a listing agent. It’s crucial to understand how the relationship will work. Let’s discuss some tips for negotiating your agreement with a listing agent. 

Understanding the Terms and Conditions

You should never sign a legal contract if you haven’t thoroughly read it. Always review all the terms and conditions, including the mediation and dispute clause, the selling rights, and the contract’s expiration date. Since it is essentially an employment contract for the agent, you must ensure the services you want are outlined in the agreement. 

Negotiating Commission and Fees

One of the main negotiation tactics for various listing agreements is adjusting the commission rate. Whether it is a percentage or a flat fee, you could negotiate for a lower amount. This is especially beneficial if you sell a high-value property or live in a very competitive market. 

Seeking Legal Advice

You can always hire a real estate attorney to review your agreement with the listing agent when in doubt. A lawyer can interpret the document, ensuring you understand the terms and conditions clearly. Hiring a lawyer could save you from entering a bad agreement with an agent who may be exploiting your inexperience. 

Selling to a Cash Home Buyer as an Alternative

Listing agreements are complex documents designed to protect sellers and agents. Paying an agent for their services will cost you, even if they come up with a strong listing price. Rather than spend thousands for their services and lose out on potential profits, sell your house in Texas fast to a cash buyer like A-List Properties. 

Our firm has the cash to buy the house directly from the property owner. You’ll enjoy saving money since you won’t need to hire an agent or deal with a listing agreement. Cash sales mean you won’t have to worry about financing delays or preparing the property for sale. Instead, we take the house as is. 

Call us today at 9720526-7042 or complete the online form to request your no-obligation cash offer.