Unit 1 Chapter 18 Flashcards
The listing agreement is
a legally-binding contract that creates an agency relationship authorizing a broker to serve as the agent for a principal in a real estate transaction.
bilateral employment contracts
Most listing agreements are bilateral employment contracts – meaning that the owner hires the broker and
promises to pay a commission in exchange for the broker’s promise to locate a “ready, willing and able” buyer or tenant for the owner.
Listing agreements must
be in writing to be enforceable.
The three most common types of listings are
- Open Listing – non-exclusive, unilateral contract allowing agent to serve either seller or buyer.
- Exclusive Right to Sell Listing – broker has exclusive right to market the property.
- Exclusive Agency Listing – broker or owner has right to sell property.
exclusive right to sell
The most widely used agreement is the exclusive right to sell listing agreement. An exclusive right to sell listing
gives the broker the greatest assurance that he or she will receive compensation for his or her marketing efforts.
And as a result, sellers usually see a quicker and more profitable sale of the property.
In a net listing
an owner sets a minimum amount that he wants to receive from the sale of the property and lets the broker have as commission any amount above the set minimum.
Buyer agency agreements
describe the terms of the relationship between the buyer agent and his or her buyer client. The agreement addresses such things as the duration of the agreement; the commission that will be paid; and the various rights, duties, and obligations of the parties.
• Exclusive buyer agency agreement
• Exclusive agency buyer agency agreement
• Open buyer agency agreement
compensation clause
All listing agreements have a compensation clause that addresses the fact that the broker will receive compensation for selling the property. The compensation clause also gives specifics as to how the compensation
will be paid – percentage or flat-fee.
Compensation vs. Listing Agreement
- All listing agreements have compensation clause.
- Compensation agreement can be between broker and his/her employees or between broker and
unrepresented seller.
In most states, listing agreements must have these four components
- Identification of property
- Promise of compensation
- Specifics of compensation
- Signed written document
Other Listing Agreement Clauses
- Parties to agreement
- Items included and excluded
- Listing price and terms
- Safety clause
- Ownership, title, and authority
- MLS
- Seller representations
- Broker and seller duties
- Deposit
- Agency relationships
- Security and insurance
- Lockbox
- Signage
- Equal housing opportunity
- Attorney fees
- Additional terms
- Successors and assigns
- Entire contract
- Signature section
Avoiding Agency Conflicts
- broker must always be clear that he/she is seller’s agent.
* broker should always ask buyer if he/she is represented by another agent.
Multiple Listing Service
- A multiple listing service (MLS) is an organization of member brokers who agree to cooperate in the sale of
properties listed by other brokers in exchange for a share of the broker’s resulting commission. - Once the listing agreement is signed, the licensee will discuss other forms that will need to be filled out in order to place the listing into a multiple listing service.
Depending on the form used in your area, you may collect any or all of the following information for submission to
your local MLS
- Listing agent’s and agent’s office’s ID
- Whether property will be listed on Internet and whether and when the address should be shown to public
- Property information like number of bedrooms and baths, lot size, year built, interior and exterior features
- School district and community information
- Driving directions to property
- Whether seller’s property disclosure has been provided
- Potential financing terms
Since a listing agreement forms an agency relationship between the broker and the seller, it can terminate
when one of the following occurs
- Performance – The licensee has helped the seller find a ready, willing, and able buyer.
- Expiration of the agreement term – The date arrives that was stated in writing on the listing agreement.
- Termination – The parties either mutually agree to end the relationship or one party decides to end it.
- Death of broker, unless a temporary agent is appointed.
- Brokerage goes out of business.
- Broker loses license.
- Listing agent transfers to different agency, listing stays with original signing agency.
