by Amar REALTOR® | August 10, 2022 4:05 am
Before You Sign a Listing Agreement: What You Need to Know
If you’re considering selling your home, you may sign a listing agreement with a real estate agent. But before you do, it’s important to understand what a listing agreement is and what it entails.
What is a listing agreement?
A listing agreement is a contract between you and a real estate agent that gives the agent the right to list and market your home for sale. The deal will also spell out the commission terms, which is the fee that the agent will earn if and when your home sells.
It’s important to note that a listing agreement does not guarantee that your home will sell. And even if it does sell, there’s no guarantee you’ll get your asking price. But a listing agreement gives the agent the exclusive right to sell your home during the deal, typically six months.
What to expect in a listing agreement?
You will sign a listing agreement when you hire a real estate agent to sell your home. This document outlines the terms of the relationship between you and the agent, including the agent’s commission, how long the agreement is in effect, and other important details. Before signing a listing agreement, could you read it carefully and your actions? You should also talk with your state’s real estate commission to see if any special rules or regulations apply to listing agreements. Once you sign the deal, it is legally binding, so you must understand the terms before committing to anything.
What will be included in the listing agreement?
Some of the things that will be included in the listing agreement are:
The property address:
It allows potential buyers to identify the property and helps ensure they know its location. The address can also be used to verify the property’s square footage and other important details. In addition, the property address can be used to track the property’s history and ownership information. The listing agreement must include the property address to provide potential buyers with the most accurate information about the property.
Contact information:
The listing agreement will also include the contact information for both the seller and the listing agent. This ensures potential buyers know how to contact someone with questions or who wants to schedule a showing.
Description of the property:
The property description should include the square footage, number of bedrooms and bathrooms, special features or amenities, and other relevant information. Potential buyers will use this description to understand the property’s size and parts. When describing the property, it is important to be as accurate and detailed as possible.
Listing price:
This is the price that the agent will use to market the property. It is important to be realistic when setting the listing price. If the property is too high, it may not attract any buyers. On the other hand, if the property is priced too low, the seller may not make as much money as they could have.
Commission/Agent fees:
The commission is typically a percentage of the sale price, so it is important to be familiar with the agent’s commission structure before signing a listing agreement.
Expiration date:
The listing agreement will also include an expiration date. This is the date the contract will no longer be in effect. The expiration date is typically six months from the date of signing.
A listing agreement is legally binding between a homeowner and a real estate agent. The contract spells out the terms of the relationship, including the commission the agent will earn if and when the property sells.
Agent Duties:
These duties include marketing the property, negotiating with buyers, and handling all of the paperwork associated with the sale. The agent is also responsible for properly listing the property on the Multiple Listing Service (MLS).
Homeowner Duties:
The homeowner is responsible for maintaining the property and allowing the agent to show the property to potential buyers. The homeowner is also responsible for paying any commissions or fees associated with the sale of the property.
Termination of Agreement:
Either party can terminate the listing agreement at any time. However, the agent may be entitled to a commission if the homeowner terminates the deal. Reviewing the listing agreement carefully before signing it to ensure you understand the terms and conditions.
Items included in the property sale:
The listing agreement will also specify what items will be included in the sale. For example, if the property consists of a washer and dryer, this will be noted in the agreement. Any items not included in the sale should also be specified in the contract.
Method of sale:
The listing agreement will also specify the sale method used to sell the property. For example, the contract may state that the property will be sold through an auction. It is important to be familiar with the terms of a listing agreement before signing one. By understanding what is included in the agreement, you can be sure you are getting the best possible deal when selling your home.
Items that will be removed after closing:
The listing agreement will also specify any items the seller must remove from the property after closing. For example, if the seller has a personal collection of art that they wish to keep, this should be noted in the agreement.
Access to the property:
The listing agreement will also specify when the agent will access the property. For example, the contract may state that the agent will have weekly access to the property from 9 am to 5 pm.
Listing period:
The listing agreement will also specify the length of time that the property will be listed for sale. This is typically six months from the date of signing.
Agreement duration:
The listing agreement is between the homeowner and the real estate agent. It lays out the terms of the sale, including the real estate commission, marketing plan, and timeline. Most listing agreements are for six months but can be shorter or longer, depending on the situation. For example, if a home is sold as a short sale, the listing agreement may be for one year.
The listing agreement is an important document that should be reviewed carefully before signing. Once it is signed, both parties must uphold their end of the deal. If either party wants to cancel the contract early, they may be subject to penalties. As such, ensuring you are ready to commit to the sale before signing a listing agreement is important.
Commission:
The Listing Agreement Commission is a commission real estate agents receive from the seller of a listed property. It is calculated as a percentage of the property’s final sale price and is typically paid at closing. The commission is negotiable between the agent and the seller, typically between 5-6%. Sometimes, the commission may be lower if the property is sold for less than the asking price or if multiple agents are involved. The Listing Agreement Commission one-way real estate agents are compensated for their services. Other factors like property type, location, and market conditions can also affect the commission.
Type of agreement:
The type of listing agreement a real estate agent enters with a client will dictate the level of service the agent provides and the duties they owe to the client. The three main types of listing agreements are exclusive right-to-sell, exclusive agency, and available listings.
- Exclusive right-to-sell agreement: The agent agrees to be compensated for selling the property even if the client finds a buyer independently.
- Exclusive agency listing: It gives the agent the right to be compensated only if they bring the buyer to the table; if the client finds a buyer elsewhere, no commission is owed.
- Open listing: Several agents may work on selling a property, but the owner only pays a commission to the agent who finds the buyer. Before entering any listing agreement, the real estate agent and the client must understand and agree with the terms.
The terms of the sale:
The listing agreement is a contract between a seller and a real estate broker that gives the broker the right to market the property and help facilitate the sale.
Signatures:
Finally, the seller and the listing agent must sign the listing agreement. This signifies that both parties have read and agreed to the terms of the contract. By understanding what will be included in a listing agreement, you can be sure you get the best possible deal when you hire a real estate agent to sell your home.
Be sure to read the agreement carefully and ask any questions before signing. You should also check with your state’s real estate commission to see if any special rules or regulations apply to listing agreements. Once you sign the deal, it is legally binding, so you must understand the terms before committing to anything.
Before you sign a listing agreement, be sure to ask the following questions:
1. What services will the agent provide?
2. How much is the commission?
3. What’s the term of the agreement?
4. How will the agent market my home?
5. What are the agent’s qualifications?
6. Is the agent a member of the National Association of Realtors?
To answer these questions, Amar Realtor will help you decide if signing a listing agreement is right. And if you do decide to sign, read the contract carefully and ensure you understand all of the terms and conditions.
Resources
https://www.car.org/en/marketing/clients/selling/listingagreements
https://www.sec.gov/Archives/edgar/data/1261159/000119312513219443/d516534dex101.htm
https://www.govloans.gov/categories/housing-loans/
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