Listings & Buyer Agency Agreements

Question 1

A seller and a real estate licensee enter into a listing agreement for a valuable property that is located in a desirable neighborhood. The listing agreement is a bilateral contract, and includes a specific end date. The licensee agrees that, in the event the seller finds a buyer, the licensee will not receive a commission. What is the name of the listing agreement?

Answer 1

Exclusive Agency.

• In an exclusive agency listing agreement, if a buyer is found, the licensee will earn a commission, unless the seller finds the buyer. With the exclusive agency listing agreement, there is only one brokerage firm. Also, the licensee has a limited, clearly-defined period of time in which to find a buyer. Finally, the exclusive agency listing agreement is a bilateral contract. A bilateral contract is the exchange of a promise for a promise. The seller promises to pay the commission if the licensee finds a buyer. The licensee promises to use due diligence to find a buyer.

Question 2

Selma lists her property with XYZ Realty, ABC Realty, and MNO Realty. In each listing agreement, Selma has agreed to pay a commission to the listing firm only if that firm finds a ready, willing and able buyer and a sale is consummated. This type of listing is _____________.

Answer 2

An Open Listing.

• An open listing gives any real estate licensee who has a listing agreement with the seller the right to a commission if he finds the buyer for the home. An open listing gives the seller the right to establish many listing agreements with many brokerage firms and pay a commission only to the firm that finds the buyer. Sellers might be under the misguided impression that this type of listing gives them an advantage. However, in most cases, the listing agents in an open listing are not apt to market the property as aggressively if there is a possibility that another firm could find the buyer. Furthermore, most Multiple Listing Services (MLS) specifically prohibit the publication of open listings in the MLS listings, so all marketing of the property must be done through other less effective means.