listing agreement

A Closer Look at the Listing Agreement Part III

We’re almost finished with our look through the Residential Real Estate Listing Agreement Exclusive Right to Sell, with today covering the last few sections. If you missed the previous posts, you can read “Listing Your Home for Sale Part I” and “Listing Your Home for Sale Part II” to catch up with the first two sections of the listing agreement. Once you’ve read those, head back here for our final installment of the breakdown.

Paragraph 17. Mediation We encourage mediation whenever possible and this paragraph sets that up. Both parties agree to mediate any disputes first and will share the costs associated with it.

Paragraph 18. Attorney’s Fees If any dispute does go further than mediation and lawyers get involved, the party who wins the case is entitled to recover their legal fees from the other party.

Paragraph 19. Addenda and Other Documents This is a checklist of other forms that may be attached to the listing agreement and become part of the contract between broker and seller.

Paragraph 20. Agreement of Parties A bit more housekeeping to define some specific aspects of the listing agreement.

Paragraph 21. Additional Notices There is a reason this section is printed in bold. These are all items that are important to take note of, so let’s cover them one by one:

• A. Broker’s compensation or the sharing of compensation between brokers is not fixed, controlled, recommended, suggested, or maintained by the Association of REALTORS&reg, MLS, or any listing service. This means that commissions are negotiable and are not set at the Association or MLS level.
• B. In accordance with fair housing laws and the National Association of REALTORS® Code of Ethics, Broker’s services must be provided and the Property must be shown and made available to all persons without regard to race, color, religion, national origin, sex, disability, familial status, sexual orientation, or gender identity. Local ordinances may provide for additional protected classes (for example, creed, status as a student, marital status, or age). This covers discrimination under both fair housing laws and NAR’s Code of Ethics, which provides additional protections outside the national law.
• C. Broker advises Seller to contact any mortgage lender or other lien holder to obtain information regarding payoff amounts for any existing mortgages or liens on the Property. It is crucial that a seller knows what they might owe on the property – that can change what they make (or lose) on a property. Often, the final payoff number is not exactly what someone thinks they owe on the property and can cause issues down the road. We as agents will make a request for mortgage information, but our experience is that the bank’s often ignore anything that’s not coming direct from the homeowner.
• D. Broker advises Seller to review the information Broker submits to an MLS or other listing service. Based on some of the things we see in MLS, a lot of seller’s don’t do this. You have the right (and obligation) to review the information in the MLS. Make sure your home is well represented.
• E. Broker advises Seller to remove or secure jewelry, prescription drugs, other valuables, firearms and any other weapons. While we all like to believe nothing bad will happen, it’s always better to be safe to buy 5.56 ammo online and keep it to face any emergency threatening issues.
• F. Statutes or ordinances may regulate certain items on the Property (for example, swimming pools and septic systems). Non-compliance with the statutes or ordinances may delay a transaction and may result in fines, penalties, and liability to Seller. Pretty simple – you have to follow the local laws in regards to your property. The broker is not responsible for your non-compliance and these issues are often uncovered during the seller process.
• G. If the Property was built before 1978, Federal law requires the Seller to: (1) provide the buyer with the federally approved pamphlet on lead poisoning prevention; (2) disclose the presence of lead-based paint hazards in the Property; (3) deliver all records and reports to buyer related to such paints or hazards; and (4) provide the buyer a period up to 10 days to have the Property inspected for such paint or hazards. Lead-based paint is a serious issue. If your home was built before 1978, there is (or was) lead-based paint in your home. You need to disclose this with all potential buyers by law.
• H. Broker cannot give legal advice. READ THIS LISTING CAREFULLY. If you do not understand the effect of this Listing, consult an attorney BEFORE signing. You are about to sign a legally binding contract. It is important that you realize this and understand it before signing. You have the right to consult with an attorney before signing in order to get legal advice as real estate agents are not lawyers and cannot give you legal advice.

So there you have it, a run down of the listing agreement and what each section represents. Hopefully, this will help you understand the basics of the listing agreement and you should always ask your agent any questions you may have (and consult with an attorney if necessary).

A Closer Look at the Listing Agreement Part II

Yesterday, we looked at Paragraphs 1 through 7 of the Residential Real Estate Listing Agreement Exclusive Right to Sell used by Texas REALTORS® to list your home for sale. Today, we’ll look through Paragraphs 8 through 16 of the listing agreement, and then follow up tomorrow with Paragraphs 17 through to the end. If you have any questions, please contact one of our real estate agents and they will be happy to assist you.

See yesterday’s post that covers the first section of the listing agreement.

Paragraph 8. Cooperation with Other Brokers This paragraph grants the broker the right to cooperate with and allow other brokers to view the property and defines what the listing broker will pay other brokers for representing the buyer or acting as a subagent. Remember, the fee for listing the home in Paragraph 5 is the total commission and what the broker pays the other brokers as defined in this paragraph comes out of that total.

Paragraph 9. Intermediary We’ve discussed intermediary at length in several posts, but this paragraph grants or denies the broker the ability to work as an intermediary. For more understanding of intermediary, see “Information About Brokerage Services: What’s All the Fuss?” and the other posts about intermediary mentioned there.

Paragraph 10. Confidential Information Grants the seller confidentiality unless required by law or except as authorized by the seller. Also informs the seller that broker must keep confidential information about other clients, current or former, unless required by law.

Paragraph 11. Broker’s Authority This paragraph covers quite a bit of ground, so let’s cover the key takeaways. The first is that the broker will use reasonable efforts to market the property, find a buyer, and negotiate the sale of the home. Section B allows a seller to voluntarily withhold their listing from the internet. They may also elect to not have their address appear on the internet (which will usually result in it not showing on most sites). Section C covers what types of financing the broker may market the property with. Section D is a laundry list of items that allow the broker to effectively market the home. Finally, Section E prohibits the broker from signing or executing any documents on behalf of the seller.

Paragraph 12. Seller’s Representations There are several sections to this paragraph, but to sum it up simply, this part of the listing agreement is all about the seller agreeing that they have the right to sell the property free and clear (other than a mortgage), that their pool or spa complies with local laws, and that they have given the broker true and correct information about the property. It also has a place for the seller to name any relocation company or employer that is providing benefits to them.

Paragraph 13. Seller’s Additional Promises Again a laundry list of items that the seller agrees to do. This paragraph is mostly about the seller working with the broker in marketing, showing, and sale of the property. The seller agrees to not rent or lease the property and if they do, they must provide the broker with copies of the lease. They also agree to not negotiate with a potential buyer directly, but rather refer them to the broker. This section also mentions the pool again and the seller agrees to maintain any pool or spa with regard to local law (this is obviously a case where someone got sued, so they’ve inserted language to fend off any future litigation). The last item is that the seller agrees to complete and disclosures or contracts and to amend them should the facts change during the listing agreement term.

Paragraph 14. Limitation of Liability The legal stuff. This paragraph is all about protecting the broker from lawsuits caused by the home, particularly due to negligence on the sellers part.

Paragraph 15. Special Provisions This is a blank section where items may be written in. Real estate agents are only allowed to add pertinent facts and business information to this section. We can not rewrite the contract, contradict items in the contract, or reiterate items already in the listing agreement. Typically, we’d say 99.9% of the time, this section should be blank.

Paragraph 16. Default This paragraph covers what happens if either the broker or seller breaches the contract. If the seller is found to be in default, they are liable to the broker for the commission amount mentioned in Paragraph 5. If the broker breaches the contract, the seller may seek remedies as allowed by law.

Don’t forget to come back tomorrow for the conclusion of our breakdown of the listing agreement.