The Dennis
Bailey Team
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The Dennis
Bailey Team
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The
Listing Agreement: What's It All About? REALTORS® and buyers sometimes work together without a written contract, but the opposite is true for REALTORS® and sellers. On the listing side, written contracts are overwhelmingly the rule, not the exception. The necessity of reading the contract carefully and understanding what it means before you sign it can't be overstated. If you need legal advice, consult a real estate attorney (you wouldn't go to dentist for an eye problem would you?) Listing contracts vary considerably. However, most REALTORS® use established listing agreement forms that are the de facto industry standard in their area or are dictated by their brokerage company. Everything on these preprinted forms is negotiable. Here are some basic terms to consider: 1. Term of the Agreement. A longer agreement benefits the agent because it allows him or her more time to find a buyer for your home. In a slow market, that's okay, but if homes are selling quickly, you don't want to be committed to one agent for more than a few months. A word of caution...because of an average 30 day advertising lag-time between submitting an advertisement and it being published, short listing periods can make it impossible to do anything more than place a sign on the property and submit it to the Multiple Listing Service. Another possibility: If an agent is willing to list your home for a very short period of time, does that mean that the agent doesn't plan to market beyond the MLS? The more professional the agent, the more likely that he or she will require a longer listing period to ensure that they have ample opportunity to recoup their advertising expenses and be rewarded for their efforts. If the home doesn't sell within the initial period and you're satisfied with the agent's efforts, you can offer to extend the term of the agreement before it expires. 2. Commission. Commissions are entirely negotiable. The rate of commission you and your agent agree to is completely up to the two of you. A lower commission will save you money...if your home sells. However, the seller should realize that setting a lower commission rate can have a negative impact on selling. Put yourself in the selling agent's shoes: If you need to show the buyer 5 homes, and of the 8 you have available, 2 of them offer less commission than the others, would you show those two?) Because approximately 80% of homes are sold through the Multiple Listing Service (MLS), via a cooperating agent, you want that cooperating agent to be attracted to your home by the commission. A higher commission will give the listing agent more incentive to invest in marketing your home. Other agents can find out how much commission is offered on your home through the MLS. The agent's commission shouldn't be renegotiated as part of the purchase agreement between the seller and the buyer because it could be considered tort interference with an existing contract. Many times, if the buyer and seller are very close in negotiations, but just can't get there, the agent will VOLUNTEER to surrender some of the commission to get the deal done. 3. MLS. A listing agreement typically authorizes your agent to post your home in the Multiple Listing Service (MLS). Unless you're selling a very exclusive property or have serious personal privacy concerns, the MLS is a no-brainer because it helps the agent market your home to the widest possible group of potential buyers. Today, most MLS databases are accessible by consumers on the Internet. The public does not have access to commission information on the listings. 4. Lockbox. A lockbox is a tiny key-holding safe that can be inconspicuously attached to the front of your property. Any agent who has the means of accessing the lockbox (e.g., the key or combination) can retrieve the keys to your home, unlock your door and show your home to prospective buyers even when neither you nor your agent is present. If you're concerned about strangers entering your home alone, don't authorize a lockbox. If your home is vacant, located in a low-crime area or if you've removed your valuables and are willing to take the risk, a lockbox might be reasonable. The more people who see the property, the better chance you'll have of selling it for a favorable price. Bottom line: Because it is more difficult to enter your property without a lockbox, it makes it more difficult to sell. Choosing to decline on a lockbox means choosing a longer time on the market. If a brokerage doesn't offer lockbox service, they are offering you inferior service. |
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