What is a Listing Agreement?
When you are ready to put your home on the market you can either choose to sell your property on your own or hire an agent to do the work for you. If you decide to trust a professional real estate broker with marketing your home than you will have to sign a listing agreement. This contract is a legally binding agreement between the seller and the real estate broker. To simply put it, by signing this documents the seller gives the broker the right to offer the property for sale.
Type of Listing Agreements
There are three types of listing agreements that the seller can choose from and they are the following:
1. Exclusive Right-to-Sell
If you are hiring a full time real estate professional, then most likely this is the agreement that the seller will be signing. In fact, this is the most commonly utilized instrument. This form of agreement gives the broker exclusive right to earn a commission by representing the seller and bringing a buyer, either through another brokerage or directly. With this type of listing agreement the seller pays both the listing and selling broker fees. The owner cannot sell the home on his own without paying a commission, only if such agreement is spelled out in the contract.
2. Exclusive Agency
In this scenario the owner lists his property with one broker, however he still reserves the right to sell his home on his own. If the broker successfully brings a buyer whose offer the seller accepts the seller still pays for both listing and seller commission. If however the owner finds a buyer he does not have to pay any commission.
3. Open Listing
This non-exclusive agreement allows the owner to sell his property himself. The owner can enter into as many open listings as he desires and pay only the broker who brings the buyer whose offer the owner accepts. Since the owner is unrepresented, he will only pay a seller’s commission which is usually one-half of typical fees. If the owner find a buyer on his own, he does not owe any commission to any broker.
When you sign an agreement with your real estate broker, he/she will enter the property information onto the MLS, the Multiple Listing Service. Your listing agreement authorizes your agent/broker to list your home on the MLS which is the place where the most potential able buyers can be found. Today, most MLS database can be found on the internet, however it only shows limited information to the public.
What is a LockBox?
In order for other agents to show your home to potential buyers, your listing agent will put a lockbox on your home. This lockbox is the key to your house. Normally all agents need to call and confirm with the seller or the sellers agent before setting up an appointment to show. If you feel uncomfortable letting strangers into your home than you have the right to not let your agent install a lockbox on your home.