1. What are the types of listing agreements?
There are 3 primary types of listing agreements. Each is different. The 3 agreements are 1) Open Listing, 2) Exclusive Right To Sell, & 3) Exclusive Agency.
2. What is an Open Listing?
An Open Listing is essentially a commission agreement. The seller can sign this type of Agreement with many different real estate brokers. If a broker brings a buyer & the deal is consummated, then the seller pays the broker the commission as per the Open Listing Agreement. The seller can also sell on his own, without a broker. In this case, he would save the commission. Only 1 broker would be able to earn a commission. The broker would provide the lowest level of service with this Agreement, usually including none or very few of the services that are traditionally included in a Listing Agreement.
3. How is an “Exclusive Right To Sell” Agreement different from an “Exclusive Agency” Agreement?
An Exclusive Right To Sell Agreement means that the seller is hiring a specific broker to help them market the property. The seller can only work with that specific broker. The broker will expose the property to other brokers & their agents to help find a buyer. The seller will be obligated to pay the commission even if he finds his own buyer. The broker will provide the highest level of service with this Agreement, usually including all the services that are traditionally included in a Listing Agreement.
An Exclusive Agency Agreement means that the seller is still hiring only 1 broker to help them market the property, but they are reserving the right to find their own buyer & save all or a portion of the commission in this case, depending on the Agreement. The broker will usually provide partial service with this type of Agreement.
4. Which Listing Agreement is best?
It all depends on the seller’s specific needs & experiences & knowledge. Most brokers & agents will not show a property with a “For Sale By Owner” sign in front, for fear of “losing control” of their buyer. On the other hand, if a seller has a lot of experience regarding marketing & negotiating, they can save some nice money by creating a unique Listing Agreement with their broker, including some services but not others & allowing the seller to save some money in commissions in certain circumstances.
5. Can real estate professionals show listings from other real estate agencies?
Yes. Most real estate brokers “co-broke” their listings with other firms’ agents via the Multiple Listing System, or MLS. All properties for sale go onto the MLS, which provides a special method for searching all the properties that are for sale in a given segment, allowing buyers the opportunity to find the best deal that matches their search criteria. If another agency sells the house, then the commission will be split between the 2 brokers, according to the terms of the Listing Agreement. The seller will not be liable for additional commissions.
6. Do I have to list my property with a real estate agency?
No. You can try to act like a “For Sale By Owner” or “FSBO”. Many sellers try that route first. If you are successful this way, then you won’t need to hire a broker. If you can’t sell this way, you can always hire a broker later. Most FSBOs end up listing with a broker. There are many reasons that FSBOs aren’t successfully selling their own property.