The 3 Traditional Listing Agreements
If you’re looking for a real estate agent to sell your home you should learn a little about the three traditional listing agreements before you sign on the dotted line. In general, a listing agreement is a contract between a seller and real estate agent that authorizes the agent to sell certain property and which specifies the terms and amount of the agent’s compensation. While sellers and agents have the freedom to negotiate and create any listing arrangement they desire, many sellers and agents adopt one of the three traditional listing agreements: (1) exclusive right to sell, (2) exclusive agency, and (3) open listing agreement.
Exclusive Right To Sell Agreement
The exclusive right to sell listing agreement favors the real estate agent and enhances the seller’s commission liability. Under an exclusive right to sell listing agreement the agent is entitled to a commission if, during a specified period of time, the house is sold no matter who is the procuring cause of the sale, or if the agent presents an offer to the seller “from a ready, willing and able buyer on terms authorized by the listing or accepted by the owner.” Hence, the agent earns their commission even if another broker or agent procures the buyer or sells the property during the specified period of time as stated in the agreement. For these pro-agent listing agreements to be enforceable the listing agreement must contain a termination date.
Exclusive Agency Listing
An exclusive agency listing is a little more balanced between seller and agent. In an exclusive agency listing the salesperson has an exclusive agency relationship with the seller; the seller will only use that agent to sell the property, and if the agent sells the property the seller will pay the agent an agreed upon commission. However, if the seller directly sells their property on their own without the involvement of another real estate agent the agent will not be entitled to a commission. For instance, if the seller advertises their property in the newspaper and that ad is the procuring cause of the sale the seller will not have to pay their real estate agent a commission. However, if the property is sold by other means than a direct sale by the owner the agent will be entitled to a commission.
Open listing agreements can discourage real estate agents from investing in the sale of the property. Under an open listing agreement the real estate agent is not assured of a commission if the property is sold during a specified timeframe. Instead, the agent is only compensated if they are the procuring cause of the sale. No exclusive agency exists as the seller is free to enter into an unlimited number of open listing agreements with other agents and the seller remains free to sell the property on their own and avoid paying a commission entirely. In essence, the agent will only earn a commission if they present a ready, willing and able buyer. If another agent procures the buyer, or if the seller directly sells their property, the agent will not earn a commission. As a result, few agents are willing to invest money, time and energy into selling property under an open listing agreement. Therefore, if you want to sell your home in a timely fashion consider a listing agreement that gives the agent an incentive to invest in the sale of your home.
To get started with the sale of your home contact Sacramento real estate agent Adam Garcia. Adam will invest time and money to sell your home for highest possible amount. For instance, the right real estate agent will do more than list your property on the MLS and hold an open house; they will shoot a video tour of your home and market your property on the internet. In fact, the best real estate agent for the job will market your property as a featured listing on their website which ranks at the top of the first page for Sacramento real estate agent. In essence, be selective when hiring a real estate agent to sell your home and be sure to do your research before you sign a listing agreement.