Listing contract

A listing contract (or listing agreement) is a contract between a real estate broker and an owner of real property granting the broker the authority to act as the owner's agent in the sale of the property.

If the broker is a member of the National Association of Realtors, the agreement must include all of the following terms:

In addition, other terms which may appear in the agreement can include:

Typically, separate listing agreements exist for the sale of residential property, for land, and for commercial or business property.

Upon listing the property, the real estate agency tries to obtain a buyer for the property and, in consideration of successfully finding a satisfactory buyer, the broker anticipates receiving a commission (fee) for the services the brokerage provided.

Although the terms of the contract could vary, usually the payment of a commission (or fee) to the brokerage is contingent upon:

If the seller refuses to sell the real estate when one of the above two conditions applies, it is typically considered that the real estate agent has done their job of finding a satisfactory buyer and the seller must still pay the commission, although the details are determined by the listing contract. Unless closing (or "settlement" or "close of escrow", as it is known in some parts of the country) is a condition of the listing agreement, the buyer's failure to complete the transaction may not require the seller to pay a commission to the broker.

The commission is usually a percentage of the sales price of the property ranging from 2 or 3% up to about 10%, but usually in the range of about 3 - 7% for houses. The commission could also be a flat fee or some combination of flat fee and percentage, based on the rate you negotiate. Commission rates and fees are negotiable and not regulated. The average days to sale in your market, advertising, labor costs, length ot term, and competition may influence the rate acceptable by the listing real estate broker before entering a listing agreement.

The commission is paid by the seller to the listing real estate broker, who will then compensate their listing agent and any co-operating brokers/agents from this commission by separate agreements with them.

The listing contract typically also includes a listing price for the property and a date of by which the contract expires. However, if the property is sold at a lower or higher price, the seller pays a commission at a proportionally lower or higher amount. If the seller does not accept a price lower than the listing price, then the broker will have to wait until a satisfactory sale to earn the commission.

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Wikipedia