What is a Listing Agreement?
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When a homeowner decides to hire an agent to sell their property, both parties usually sign a contract called a listing agreement. The listing agreement grants a broker legal authority to represent the owner in a real estate transaction. The document lays out important information for the seller, such as agreed-upon terms regarding commission percentages, timelines, and marketing tactics. Having a formal contract is a good thing for both the owner and the agent.
What is Included in a Listing Agreement?
The listing agreement includes specific information about the property, along with agreed-upon terms between the agent and seller. The document lists:
This section includes the address of the property, as well as items that will be included or excluded from the sale. Since fixtures such as ceiling fans and window treatments are usually included, the Property Description will list any fixtures that will be removed prior to purchase. It will also list any personal property, such as furniture or playground equipment, that the buyer will receive.
The listing period identifies the timeframe in which a realtor will attempt to sell the home. Most contracts are valid between three and six months, but this is negotiable depending on the state of the real estate market. At the end of the listing period, the homeowner is free to either sign another listing agreement with the same agent, hire a new agent, or take the home off of the market.
The agent will recommend an asking price for the home based on a comparative market analysis, which identifies similar homes in the St. Louis area that have sold in the past 90 days. If the homeowner needs to sell the home quickly, he or she may request to list the price lower than what the agent recommends. Once the seller agrees upon a listing price, it will be included in the contract and will not change unless an addendum is added or a new listing agreement is drawn up.
Broker Duties/Marketing Plan
In this section, the realtor will list all the ways he or she plans to promote the home throughout the contract period. Common marketing tactics include listing it on the MLS, promoting it on social media pages, and arranging open houses.
The seller will state what percentage of the sale price the agent will receive upon closing on the home. In most cases, a total commission of 6% is split evenly between the buying and selling agents.
This section states that if the agent shows the home to potential buyers, but those buyers don’t decide to purchase the home until the listing agreement expires, the agent will still get commission if it’s within an agreed-upon protection period.
Mediation and Dispute Clause
Most listing agreements state that if any disagreements occur between the seller and agent, that they will hire a third party mediator to resolve the issue.
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The Benefits of an Exclusive Right to Sell Listing Agreement
In real estate, there are several kinds of Listing Agreements, including:
- An Exclusive Right to Sell Listing, in which the agent listed on the agreement is the only one who represents the seller, and the only one who receives commission for selling the property.
- An Exclusive Agency Listing, which states that the seller will only use the agent listed on the agreement, but the agent will not get paid if the owner finds a buyer.
- An Open Listing, which allows sellers to use multiple brokers, but no brokers will be paid if the owner finds a buyer.
Realtors prefer Exclusive Right to Sell Listing Agreements because they offer advantages for both the agent and seller.
A Loyal Relationship
Because the agent and seller are equally invested in finding the right buyer, they basically enter into a partnership. The realtor is highly motivated to sell the property, so he or she works diligently to formulate a strategic marketing plan that attracts solid offers. And since the owner only has one point person sending updates, he or she remains informed during the entire process.
An exclusive agent will make recommendations to get the best price for the property. If a drab room needs to be painted, an ugly couch needs to be removed, or the whole house needs decluttering, they will bring it up since those changes will make the home more appealing to buyers. A dedicated agent will also have no problem advising a seller on which offer to take, because they want the sale to go through just as badly as the owner!
Years of Experience
Most established brokerage offices will only work with sellers who agree to an Exclusive Right to Sell Listing. They have spent many years learning to identify qualified buyers, which allows them to sell homes faster, and for a higher price than brokers who aren’t fully committed to the entire sales process.
If you’re a Greater St. Louis homeowner looking to find a qualified buyer for your property, Berkshire Hathaway HomeServices Select Properties can help. We walk our clients through every step of the sales process, including a detailed explanation of what goes into a listing agreement. When you work with any of our offices, you will find agents who are just as dedicated to selling your home as you are.
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