A Closer Look at the Listing Agreement
When you’re ready to list your home with one of our REALTORS®, you will be asked to sign a Residential Real Estate Listing Agreement Exclusive Right to Sell, which is a legal contract that allows your agent to list and market your home for sale. As with many of the forms we use in real estate, there’s a lot going on in the document and it’s best to know just what you’re signing. With that in mind, we thought we’d take a closer look at a residential listing agreement and cover some of the finer points of the contract. There’s a lot to cover, so we’ll be breaking it down into Part I, Part II, and Part III.
Please note, this is a legally binding contract and if there’s something you don’t understand, we recommend you contact a lawyer for clarification.
The Listing Agreement by Paragraph
Paragraph 1. Parties This one is pretty simple – it defines the parties involved – the seller and the agent/broker. It also states “Seller appoints Broker as Seller’s sole and exclusive real estate agent and grant Broker the exclusive right to sell the Property.” This prevents the seller from listing the home with multiple brokers (there is a way to do this, but few brokers would ever sign one).
Paragraph 2. Property Section A of this paragraph defines the property using its legal description. Section B defines what “improvements” are, giving specific examples. This paragraph is quite important as any “improvements” are automatically sold with the house. You should always read this section carefully so you know exactly what is included. Section C describes and defines “accessories” which are also considered as part of the sale. The things most commonly missed in this section are curtains, rods, shades, blinds…window coverings. These are considered to be part of the home as well…unless noted in Section D, “exclusions.” These are items that the seller has deemed will not be sold with the house. Section E asks whether the property is or is not subject to mandatory membership in an HOA.
Paragraph 3. Listing Price This one is pretty self-explanatory. It does go on to explain that the seller will pay all typical closing costs for sellers, which are defined in residential contracts (purchase agreements).
Paragraph 4. Term This section defines the beginning and end date of the listing. Listing agreements must have an end date by law and can not be open ended. It is important to note that Section B of this paragraph states that if the seller enters into a binding written contract to sell their home before the date the listing begins and the contract is still binding when the listing begins, the listing agreement is null and void (common sense it would seem, but typically these types of sections are added to clarify after a lawsuit has occurred).
Paragraph 5. Broker’s Compensation Section A lays out the broker’s commission for selling the house. Sections B and C explain what the terms “earned” and “payable” mean. Section D covers “other compensation” – it is important to note that Sub-Section (1) deals with the breach of a contract by a buyer and how the broker would be paid in the event that the seller collects earnest money, the actual sales price, or damages. Section E is for the “protection period” which covers a term specified in the listing agreement within which a broker may collect a commission if a buyer that the broker had previously brought to the property. This prevents sellers from cancelling a listing agreement and calling up a potential buyer to negotiate a deal and cut the broker out of it. Section F lists the county in which cash payments are accepted by broker. Finally Section G authorizes the broker to collect any earned and payable commission directly from a title company.
Paragraph 6. Listing Services There are three basic choices in this paragraph. A seller may elect to A) have their listing filed with the local MLS, B) wait a defined amount of time (days) before filing the listing in the MLS, or C) not have their listing filed with the MLS.
Paragraph 7. Access to the Property This part of the listing agreement spells out the terms of access to the property by the broker and other agents, assigns a showing service (in San Antonio we use Centralized Showing Service, known as CSS), and talks about keyboxes (we call them lockboxes typically). There is a section granting the broker to place a lockbox on the property (or not allow it).
We’ll be covering a second section of the listing agreement tomorrow, with the final wrap up coming in two days. So stop back tomorrow for more.
