Real Estate Listing Agreements
An agreement between a real estate broker and a seller is called a listing agreement. The seller agrees to pay the broker for finding a ready, willing, and able buyer at an acceptable price. The agreement should be signed and must identify the property, the terms and conditions of an acceptable sale, and the amount of commission to be paid. In addition, the agreement should have an expiration date- this is the date by which the broker must find a buyer. Without an expiration date the right to the commission could arguably go on forever. There are also certain statements that must be included by law in each listing agreement by law under the Business & Professions Code.
Types of Listing Agreements
There are more than one type of listing agreement and depending on the real estate market not every type may be right for each seller.
An Exclusive Listing Agreement allows the real estate broker to be the only broker allowed to sell the property during its term. The owner may not enlist another broker to also make efforts to sell the house during the same time. If the owner hires a second broker to speed things up the first broker could be entitled to a commission even if the second broker finds the buyer. Under an exclusive listing agreement the seller is usually able to cancel the listing during the term. If the seller finds a buyer himself he or she may be able to avoid the broker’s commission.
An Open Listing Agreement is the most favorable to the seller. This type typically allows the seller to revoke the listing at any time, to sell it herself, or to list it with another broker during the same time. Because there may be more than one person at a time working to try and sell the house it is possible for disputes to arise as to which person is entitled to the commission. More than one broker may claim that he/she was the person who found the buyer.
An Exclusive Right to Sell Listing Agreement is the type most favorable to the broker. Under this type of agreement the real estate broker is entitled to a commission if the house is sold during the sales term no matter who finds the buyer. Even if the owners find the buyer themselves, using Craigslist for example, the broker will still be entitled to the full commission. There is typically no right to cancel the agreement during the term.
A Net Listing Agreement requires payment to the selling real estate broker any amount over a certain minimum.
From Sebastopol, the Law Offices of Graden Tapley represents clients throughout Sonoma County, including Santa Rosa, Cotati, Healdsburg, Petaluma, Rohnert Park, Santa Rosa, and Windsor.