Listing Agreement Overview

Listing agreements are a legal document and can be challenging to understand, especially if you only see them a few times in a lifetime. However, knowing the main elements of a listing agreement will help you determine if it is standard, missing agent protections, or if you are signing something that isn't.

What Is A Listing Agreement?

A listing agent agreement (also known as a contract for listing agents) is a legally binding document between the seller and the agent who represents them in selling or purchasing their home. There are many types of standard listing agreements. However, any agreement can be modified to suit a particular situation.

What Is Included In A Seller-Broker Agreement?

Contracts can be modified or amended, and addendums may also be added. However, there are specific common terms for real estate listing agreements:

• Commission Amount

  The commission amount is typically 5-6 percent of the sale price. This is divided roughly 50-50 between the listing agent and buyer's agent. The type of listing agreement you have will determine whether or not you owe a commission to your agent. More details later.

• Listing Duration

  This shows how long your contract will be valid before expiring and if your agent ceases to represent you. It is usually three months in most major realty markets. However, it may be shorter or longer depending on the market.

• Cancellation Clause

  If you cancel your contract before your agent sells your house, the cancellation clause will outline any penalties that you may face.

• Responsibilities

  This section outlines the tasks and services that your agent will perform. 

• Disputes

  These guidelines outline how conflicts or issues will be dealt with. These can include disagreements about listing prices or marketing strategies.

• Ownership

  This section confirms that you are the owner of the property. Therefore, you have the legal right to sell it and can transfer the title.

• Expiration

  The listing agent can also provide a list of buyers who saw the property while they were agents if the contract is not renewed. The listing agent will still be liable for their commission if a past buyer comes back to the house after the contract has expired. This is also known as a "holdover clause" or a "carryover clause."

• Dual Agency

  Because they represent both the seller AND the buyer, this is where a listing agent gets the full commission. This is illegal in many states. In those states that it is legal, restrictions are imposed by the state and local professional organizations to prevent conflicts of interests.