Before You Sign a Listing Agreement
There are three primary types of listing agreements, and each one offers a different level of services, responsibilities and rights for both the agents and the sellers. It is important to become familiar with all types in order to decide what is best for you, especially before signing anything.
Exclusive Right to Sell
The first type of agreement is called the “Exclusive Right to Sell” and this is the most widely used listing contract. It gives the signing agency the exclusive rights to sell your property. No matter who buys the property, even if you find the buyer yourself, you pay commission to the agency at closing time. However, if another agency brings a buyer, the listing agency usually shares its commission with the other agency.
An Exclusive Agency agreement also gives one specific agency the right to sell and market your property, however if the seller finds a buyer who was not introduced to the property by the agency, then the seller retains the right to sell without having to pay a commission to the agency. Also, if another agency brings a buyer, the listing agency shares the commission with the other agency.
An Open Listing agreement is something you can sign with several agencies. No one single agency has the exclusive right to sell the property, and the seller can bring a buyer without paying commission. If you do end up selling through an agency, the commission goes only to the selling agency, and no commission is shared.
Finding the Best Listing Agreement
Some agencies want to protect their investment, because they spend a good deal of time and money trying to sell their listings. Therefore, they will only offer an Exclusive Right to Sell. They don’t want to offer you the Exclusive Agency agreement because if you sell your house during the listing period, even despite their marketing efforts, they don’t get any commission. Also, by signing this type of agreement, there is no question has to who really introduced the buyer. The buyer has no option to skip the agency. This is a great idea if you don’t want the hassle, the stress or the worry of trying to sell yourself and you don’t mind paying commission. If you do choose this option, be sure there is a listing period written into the contract so that if they don’t sell your home by a specified date, you are no longer bound to the contract.
Although many agencies will sign an Open Listing, they probably won’t spend time or money on marketing. If they have a buyer that they think may be interested, of course they will show it, but they are probably more interested in listings held exclusively by their agency.