It’s no secret that there is a housing shortage. If you have been considering whether to put your home on the market, now would be a great time to do so.
Not only are homeowners finding their homes selling in a record amount of time, but sellers are often getting more than their asking price.
Yet, before you go put up that “for sale” sign in your yard, it can be helpful to learn about how a real estate listing agreement works. Since there are a few different types of listing agreements, you will want to understand which option is best for you.
Here are the 3 things you should know about the real estate listing agreement process.
What Is a Real Estate Listing Agreement?
A real estate listing agreement is a legal contract between a property owner (principal) and a real estate agent (broker). This contract allows an agent to help the property owner find a buyer based on terms set by the owner of the property.
Once the agent has completed their part of the agreement, they are paid a commission by the owner based on the terms in the listing agreement.
How Is a Real Estate Listing Agreement Used?
Listing agreements are used to protect both the agent and the property owner. They allow sellers to have an agent represent them and their property to potential buyers.
A real estate listing agreement is essentially a contract of employment. It states the agent has been hired to represent the seller without the exchange of property between them.
The laws of real estate have specific provisions that a broker must follow. A broker is the only one who can perform real estate listings, selling, or renting of another person’s property. With the same conditions occurring in most real estate negotiations, most listing agreements need similar information to conduct MLS real estate listings.
The first thing there has to be in the listing is a description of the property. This description includes personal property that the seller will leave and remove before selling the property.
Different Types of Listing Agreements
There are three different types of real estate listing agreements. The first one is an open listing. This means the property owner selling the property has the right to hire as many brokers as agents as they like.
This type of agreement is more commonly referred to as a nonexclusive real estate listing agreement. The reason being the seller is only responsible for paying a commission to the broker who finds a buyer. It also means that the seller has the right to independently sell the property without being responsible for paying a broker commission.
Another real estate listing agreement type is an exclusive right to sell listing. This is one of the most common agreement types. This means that one broker is appointed to be the sole agent representing a seller.
The broker also receives a commission even if they aren’t the one to sell the property while this type of listing agreement is in place.
The last type of real estate listing agreement is an exclusive agency listing. In this agreement, one broker is authorized to be an exclusive agent for the property owner. Once the property is sold, the seller handles paying a commission to the broker if they made the sale.
No matter which type of real estate listing agreement you use, a broker can help you. For example, you can learn more here about expired real estate listings. A broker can also help you to find new real estate listings.
Find the Real Estate Listing Agreement That Is Right for You!
Now that you know what a real estate listing agreement is and how it works, you can feel confident in using it when selling your home. Depending on what type of listing agreement you choose, make sure it’s the best option for you.
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