Chapter 4 - Listing Agreements Flashcards
Listing Contract/Agreement
An employment contract between principal (seller) and agent (broker) authorizing the agent to perform services for the principal involving the latter’s property; listing contracts are entered into for the purpose of securing persons to buy, lease, or rent property. Employment of an agent by a prospective purchaser or lessee to locate property for purchase or lease may be considered a listing.
What are the 4 parts of a listing contract?
- Duration (i.e., 3 months, 6 months, 1 year)
- Sales Price
- Sales Commission - negotiable between principal & broker
- Exceptions to Commission - this absolves the seller in whole or part from paying commission if they find a buyer themselves
Exclusive Right to Sell Agreement
A listing agreement employing a broker to act as the sole agent for the seller of real property under the exclusive terms of which the broker is entitled to a commission if the property is sold during the duration of the listing through another broker or by the owner without the services of an agent.
Exclusive Agency Listing
A listing agreement employing a broker as the sole agent for the seller of real property under the terms of which the broker is entitled to a commission if the property is sold through any other broker, but not if a sale is negotiated by the owner without the services of an agent.
Open Listing
An authorization given by a property owner to a real estate agent wherein said agent is given the nonexclusive right to secure a purchaser; open listings may be given to any number of agents without liability to compensate any except the one who first secures a buyer ready, willing, and able to meet the terms of the listing, or secures the acceptance by the seller of a satisfactory offer.
- -non-exclusive, unilateral real estate contract
- -offers brokers the lowest level of protection
Unilateral Contract
legally-enforceable promise, entered into by competent parties, that obligates one party to do a specified legal service for another for which the other party pays for performance of the service - EX: listing broker securing the buyer will get paid
Non-exclusive agreement
2 parties entering in an agreement that services will be performed, but more than 1 party may be contracted to perform the same services - EX: open listing
Net Listing
A listing which provides that the agent may retain as compensation for agent’s services all sums received over and above a net price to the owner. The real estate licensee will provide a stipulated net price to the property owner and the licensee can keep any amount paid by the buyer over the stipulated net price. Issues of conflict of interest may arise, which makes these agreements illegal in Wisconsin
One-Party Listing
similar to an exclusive right to sell agreement, but your firm only gets the commission if you sell the property to a party listed in the contract
Residential Listing Agreement (Form WB-1)
This agreement outlines your legal obligations to the seller and their obligations to you:
- -type of agreement
- -description of the property
- -price
- -what’s included & excluded in the sale (especially rented fixtures)
- -marketing
- -buyer’s financial capability
- -agreement to not discriminate
- -agent obligations to principal and if released from negotiation
- -agreement to multiple representation relationships
- -form definitions
Residential Condominium Listing Agreement (Form WB-4)
- -similar to standard residential listing agreement
- -description of the property along with additional information about common areas
- -marketing + requirement to provide prospective buyers with a range of documents: last 2 years’ F/S, minutes from the last 3 owners’ meetings, and minutes from the condo’s board meetings from the last 12 mo, inspection reports, pending litigation, association’s insurance, reserve account balances, etc. (+ anything else the Buyer may request)
- -required disclosure materials
First Right of Refusal
when a unit goes up for sale, the owner (condo association) gets the first option to buy the unit
What condominium disclosure materials are required to be provided to the buyer and in what time frame?
Seller is required to provide buyers with the condo disclosure materials within 10 days of acceptance of the offer, but no later than 15 days prior to closing;
- -proposed or existing declaration, bylaws and any rules or regulations, and an index of the contents,
- -proposed or existing articles of incorporation of the association, if it is or is to be incorporated,
- -proposed or existing management contract, employment contract or other contract affecting the use, maintenance or access of all or part of the condominium,
- -projected annual operating budget for the condominium including reasonable details concerning the estimated monthly payments by the purchaser for assessments and other monthly charges,
- -leases to which unit owners or the association will be a party,
- -general description of any contemplated expansion of condominium including each stage of expansion and the maximum number of units that can be added to the condominium,
- -unit floor plan showing location of common elements and other facilities available to unit owners,
- -the executive summary.
How can listing agreements be terminated?
- -Sale of underlying real estate
- -Expiration of the agreement
- -Mutual Agreement of both parties
- -Destruction of the Property
- -Death of Either Party
- -Breach of Contract
What remedies are available for breach of contract?
- -Reassigning the agreement to another agent under the same brokerage
- -Court Litigation, seeking damages
- -Mediation and/or arbitration (alternative dispute resolution)
- -Payment of agreed-upon commissions in a seller breach
