Selling your home takes much study and research on your part as a seller. An annual survey states that 90% of home sellers get help from real estate agents. If you are looking to put your home up for sale, it helps to hire a trusted real estate agent or broker.
Hiring a broker involves a listing agreement. As the seller, do you know about the different types of listing agreements? Check out this brief listing agreements guide to understand more on the subject.
What Is a Listing Agreement?
In essence, a listing agreement is a legally-binding written contract with your broker. The bulk of it is their responsibilities and compensation. Your contract may also include the following:
• The agent’s cut or commission
• Duration of the contract
• The extent of the agent’s authority
• Resolution in the case of dispute
These are some key parts of a listing agreement, but they may include much more information. They will also vary across the types of listing agreements.
Three Types of Listing Agreements
Here are the three common listing agreement types: (1) exclusive right to sell, (2) open listing agreement, and (3) exclusive agency. While they all have similarities, they each set different boundaries. Let’s go through them one by one.
Exclusive Right to Sell
This is the most common of the listing agreement types. It is also what most agents prefer. In this case, you are bound to one listing agent only. You cannot work with another agent as long as the contract is effective.
The agent will have the exclusive right to sell the home. This gives them freedom and security, so it is often what they want. In this case, you are bound to only one person, so make sure you hire a reliable real estate agent.
There may be exceptions to the exclusive right to sell, depending on the agreement. For example, the contract may include the name of a specific person. If that person buys it, the agent will not receive their full commission.
Open Listing Agreement
In contrast to the previous type, an open listing is a non-exclusive agreement. You can hire many brokers and then compensate the one whose offer you accept.
In open listing agreements, you can even find a buyer yourself. If you do this, you will not owe any of your hired brokers any commission.
This is cheaper than an exclusive agreement, but many real estate brokers prefer a different arrangement. Open listings are rare because they do not offer reassurance on the broker’s part.
This is much like the two mentioned types of listing agreements. In an exclusive agency listing, you have an agreement with only one broker. They receive the commission if they or someone they authorized make the sale.
In this case, you can also find a buyer yourself as the seller. This is what differentiates it from the exclusive right to sell.
Signing Listing Agreements
This guide gave you an introduction to the three types of listing agreements. Each one has its pros and cons. When writing and signing a listing agreement, it all comes down to an understanding with your agent.
If you are looking to sell your house, you may be looking to move to a new one. Need tips for moving into a new place? Check out this article on how to unpack your life in a new home.