What Is a Real Estate Listing Agreement?
My realtor is asking me to sign an inventory agreement, what is it and really should I sign it? Don't get worried if you are confused, individuals are. Once you begin talking to a realtor about selling your property, they will probably have you sign a real estate listing agreement. This is a very normal, but you do want to make sure that (as with any contract) you understand what you are getting yourself into.
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You will need this type of contract let's say you sell your house (or property); it's a contract to allow your agent to list your house for sale. Basically, it can make them your agent within the transaction. It is vital to remember that real estate agents are the employees of your real estate broker (Century 21, or Remax, as an example) a listing agreement is in fact between you and the broker. Most of the time you will work with the property agent, but the broker supervises their work. The broker is also legally responsible for the agent's actions. Whom ever your listing representative is, remember that they earn their commission when they present a qualified buyer. This could become an issue if you have a listing agreement, and then change your mind about selling after the agent has done the job to find you a buyer. Inside a case like that, you'll probably still owe them commission.
There are three different types of these agreements.
The initial type is an open listing agreement. This is where a homeowner (or seller of property) can sign a contract with as many agents/brokers as they like. This benefits the master because, in theory, they are able to have many agents employed by them at once. The commission in this case would go to which ever agent introduced the buyer. In the real estate field we say this can be being the "procuring cause" of the sale. The negative effects of this kind of agreement is that because they are not guaranteed their commission, your agents may well not work very hard for you.
The next type of listing agreement is an exclusive listing agreement. Much like it sounds, it gives the agent or broker the exclusive to list your property. In these cases, an owner can only sign with one agent or broker. You will need to note here that despite its name, there are certain conditions that must be met through the selling agent to be able to earn their commission. They have to sell the property ahead of the termination date. Every exclusive listing agreement must legally add a definite termination date; it may be any length of time truly is between 90-180 days. Also, in these types of contract the owner reserves the option to offer the property themselves. When the owner sells your house themselves they do not have to pay for the agent a commission.
The 3rd type of listing agreement will be the exclusive right-to-sell listing agreement. This one is similar to the exclusive listing. It must have a definite termination date and a seller can only sign with one broker. Real estate agents are encouraged to have sellers sign this kind of contract, because no matter who sells the house, they will get the commission. Some home owners have tried to get out of paying the commission through getting in contact with a potential buyer themselves, waiting before listing agreement the years have expired, and than making arrangements themselves with the buyer. Don't do this. Not only is it unfair to a hardworking agent, but a majority of exclusive right-to-sell agreements add a "safety clause" that assures that they'll still get their compensation in such a circumstance.
Real estate listing agreements can be lengthy. Make sure you read it through slowly and punctiliously and ask questions about what you don't understand. Even a very basic listing agreement should include the following:
Identification of the subject property. Acceptable regards to sale Grant the broker authority Determine the broker's compensation (this is sometimes a percentage or a set amount of money) A termination date (not necessary on an open listing)
It's so important to read and do your research when entering into the property listing agreement. These contracts are there to simplify the home selling process also to prevent any future problems. Ensure your contract reflects just what you expect your agent and broker to do, and that you understand the position as well.