Listings Contract Basics
A listing contract is a personal service contract between you and a licensed real estate broker. This contract authorizes the broker to act as your agent by finding someone to buy your house. The listing contract contains two basic promises: The broker promises to do his or her best to find a buyer for your property, and you promise to pay the broker a commission. Legally speaking, the definition of a listing contract is a bit more complex:
- An employment contract: A listing contract specifies the exact terms and conditions of your employment contract with a licensed real estate broker. It also authorizes the broker to represent you during the sale of your property.
- A compensation agreement: Although the listing broker's pay is almost always a commission based on a specified percentage of the sale price, compensation doesn't have to be a commission. Other negotiable options include paying your broker a set fee for selling the property or compensating the broker on an hourly fee basis.
Considering the types of listings
All your various listing options boil down to variations on two types of listings: exclusive listings and open listings.
An exclusive listing is exactly that -- an exclusive authorization giving only one broker the right to find a buyer for your house -- though there are two very different types of exclusive listings. Exclusive right to sell listings is the most common listing type and popular with both sellers and brokers.
An open listing is a non-exclusive authorization for brokers to find a buyer for your property. You can give as many brokers as you wish an open listing on your house.
See each section for details on how each type works, their advantages, disadvantages and risks.