You’re about to sell your home for the very first time and have already met with several real estate agents — each offering insights into property market conditions, pricing, staging tips, navigating offers, and more.
However, before any agent will place that “For Sale” sign in your yard, there’s one thing they all need you to do: sign a listing agreement.
After the repeated request to sign this paperwork, you wonder, “What exactly am I agreeing to?” or “Why does this document matter so much?” In this blog post, we’ll go over what a listing agreement is, exploring everything you need to know to feel confident before putting pen to paper.
What Exactly Is a Listing Agreement?
A listing agreement is a legally binding contract that gives a real estate agent you employ the power to market, negotiate, and close the sale of your house on your behalf.
As a home seller, you pay the agent a commission for using their networks and expertise to identify a possible home buyer and oversee the sale process through closing.
While it may appear to be just another contract, a listing agreement serves as the cornerstone of your relationship with your real estate agent, defining both your rights, obligations, and expectations. It could make the difference between a pleasant and stressful home sale.
There are 3 main types of real estate listing agreements, including:
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Exclusive Right to Sell Listing
This type of listing agreement is preferred by real estate agents, and for good reason: it gives one agent the sole authority to market and sell your house, and they get paid regardless of who ends up finding a buyer.
So, you’re still required to pay the agent’s commission even if you, the seller, secure a buyer on your own when the listing agreement is in place.
A key benefit of the exclusive right-to-sell listing agreement is that it gives real estate agents the greatest incentive to concentrate all their efforts on selling your home — potentially resulting in a quicker sale.
Having to deal with only one real estate agent and having to pay a commission irrespective of who sells your house are drawbacks that you, like many other property owners, may find annoying.
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Exclusive Agency Listing
This contract is similar to the exclusive right to sell, but with a twist.
The right to promote and sell your property is still granted to one real estate agent, but you won’t have to pay the agent a commission if you find a buyer on your own. However, as the home seller, you must pay the agent fees if the realtor brings a purchaser.
Because real estate agents have no assurance that they’ll be paid, an exclusive agency listing may make them less motivated, which could lead to reduced marketing efforts and poor support services.
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Open Listing
Here, you’re free to work with as many agents as you like, and the commission is paid to the agent who delivers a buyer to the table.
Again, you don’t have to pay the real estate agents you work with if you’re able to market and sell your home on your own.
Since open listings enhance competition among real estate agents and could end in shared commission fees, they’re rare.
Realtors typically only agree to them if your property was first listed with just one agent and didn’t sell or if you want to sell your house as soon as possible. This is because multiple relators utilizing various approaches to draw in buyers increase the likelihood of a speedy sale.
What Are the Essential Components of a Listing Agreement?
The following are the most important things a real estate listing agreement should contain.
Home Description
This provides a detailed description of your property, allowing the real estate agent to list your home the way you’d like. It ought to include:
- Your home’s address and legal description
- Features such as the number of bedrooms, baths, swimming pool, and square size
- Known flaws or problems
- Information on any liens
- Disclosures required by municipal regulations, like flood zone status or lead paint
- Fixtures that, when the property is sold, may be left behind or included. For instance, because blinds and shades are fixed to windows, it is typically expected that they will stay in the house. Appliances and window treatments, however, can be considered personal property that the seller wants to go with.
Listing Price
Your realtor usually conducts a comparative market analysis (CMA) to calculate the listing price for your house.
A CMA determines a fair price that prospective buyers who are searching for a home similar to yours would be willing to pay by examining the prices that properties identical to yours in regard to location, size, age, age, etc., have recently sold or listed for (usually 90 to 180 days).
The initial listing price acts as a reference for marketing and offers, but it can be adjusted later, which is frequently the case.
Listing Period
This states how long the real estate agent has to sell your house. Though shorter or longer terms are negotiable based on a seller’s needs, the typical lengths are 3 to 6 months.
You can either find a new agent or extend the contract if the house doesn’t sell in the predetermined time frame.
A termination provision should be inserted while negotiating the duration of the listing agreement. This clause will specify the circumstances in which you or the real estate agent may terminate the listing agreement early.
Termination may be due to an agent’s poor performance, your decision not to continue with your home sale, or a mutual choice to terminate the listing agreement for any other reason.
Real Estate Agent and Seller’s Duties
The agent’s duties, from advertising the property on the Multiple Listing Service (MLS) to answering buyer questions, are spelled out here, helping you understand what to expect from them.
It might be your responsibility as a house seller to maintain the cleanliness of your property, facilitate showings, or point out any problems with the property. These responsibilities are detailed in the agreement to avoid misunderstandings during the home sale.
Real Estate Commission
A real estate agent’s compensation generally ranges between 5 to 6% of your home’s sale price. In markets where competition is stiff, some agents may be willing to accept a lesser percentage.
After signing, this percentage cannot be changed, so ensure you’re clear on what you’ll pay your real estate agent before agreeing to a listing agreement.
Ditch the Listing Agreement and Agent Fees—Sell Your Home for Cash Now!
Signing a listing agreement means committing to weeks—if not months—of constantly prepping your home for showings, undertaking repairs, waiting for the right buyer to come along, and paying hefty real estate agent fees. But it doesn’t have to be that way!
HomeBuyers of Pittsburgh, the #1 professional homebuyer in Pittsburgh, offers a quicker, easier approach to selling your house, cutting through the red tape. We purchase properties for cash in any condition, saving you the trouble of dealing with realtors, their agent fees, renovations, open houses, and protracted waiting times to sell your home. Working with us you get a fast, competitive cash offer and we can close in a matter of days.
Call 412-444-8914 or email info [@] urbanpgh.com today to speak with HomeBuyers of Pittsburgh about how simple it is to sell your house without the paperwork and delays of a traditional sale.
