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3 Types Of Listing Agreement Options For Sellers

By Bill Gassett | October 8, 2022

Did you know that there are different types of real estate listing agreements? If you are nodding your head, no, you're not alone. Most people have no idea that there are different options.

When selling a home, you must know the different listing agreement options available to you. Understanding the various listing agreement contracts can help you strike the best deal for your home and protect your rights.

You probably won't be presented with different listing agreement options when you meet with a real estate agent.

The reason is that one type of real estate listing agreement is far more common than any other. It is an exclusive right-to-sell listing contract. Maximum Real Estate Exposure has covered the exclusive right to sell listing contracts in depth.

Let's go over each of the three listing agreement types so you are more familiar with the choices.

Keep in mind most real estate agents may not agree to anything but an exclusive right-to-sell listing agreement.

Types of Listing Contracts in Real Estate
Types of Listing Contracts in Real Estate

What is an Exclusive Right to Sell Listing Contract?

An exclusive right to sell real estate contract is the most common agreement in use today.

The exclusive right-to-sell agreement gives one real estate brokerage complete control over selling a home.

The chosen exclusive right-to-sell listing agreement says that a real estate agent will represent a seller and earn a commission for successfully completing the sale.

The buyer who purchases the home can be procured from an outside brokerage bringing the buyer or in-house through the listing brokerage's efforts.

Home sellers will pay a commission to both the listing and selling agents. The total commission in the sale is typically split equally, although another arrangement is possible.

Owners Cannot Sell FSBO Without Paying Their Agent

With an exclusive right to sell listing contract, the owner of a property cannot sell it on their own without paying their agent the commission.

Sometimes a real estate brokerage may allow exclusions for certain parties, such as family members or close friends.

However, the exclusion will usually last for only a tiny window. A real estate agent doesn't want to spend months of time and marketing dollars only to find out someone the seller knows is purchasing the house.

The exclusive right to sell is the gold standard in real estate contracts.

What is an Exclusive Agency Listing Agreement?

An exclusive agency agreement is similar to an exclusive right to sell. The primary difference is that the exclusive agency gives the seller the right to find their buyer without paying a commission.

For a seller, it is the best of both worlds. They get a real estate agent working hard for them, but they can also market and find a buyer on their own.

An outside brokerage can still bring a buyer with an exclusive agency agreement, and the seller would pay a full commission, just like an exclusive right-to-sell agreement.

Sometimes with an exclusive agency or exclusive right to sell, a real estate agent may negotiate a commission split with the seller if they procure their own buyer.

A real estate agent could treat the seller as a co-broke and provide all the typical marketing services and representation. An arrangement such as this can keep an agent motivated to sell.

It's a win-win for the seller because they potentially will be paying a much lower fee. Typically, it will be as much as only a half commission.

What is an Open Listing?

Open listings are the least common real estate agreement. They are frowned upon by most agents, and for good reason.

An open listing means that the home can be sold to anyone interested. There is no allegiance to any particular real estate agent.

An open listing is also referred to as a non-exclusive agreement. A home seller can hire more than one real estate broker with open listings.

They will only pay a commission to the agency that procures a buyer. The only advantage to an open listing for a seller is they will usually only pay half of a commission.

So, if the standard commission rate for the area is five percent, a seller might only have to pay an agent 2.5%.

In addition, if the seller finds their own buyer, they will not owe anyone a commission.

Open listings are not that common in real estate. Very few agents want to waste their time with this scenario.

Essential Real Estate Contract Terms

Some of the most crucial terms in a real estate listing contract are the length and the commission rate. You will also want to know if the agent offers a cancellation policy.

Usually, the contract length is negotiable. You can expect most real estate agents to look for somewhere between three and six months.

It is essential to pay a Realtor commission rate that is the same as your competition. Thinking a lower commission will put more money in your pocket is usually not true.

You want to ensure the buyer's agents sell your home. Paying them less than what other sellers are doing will not accomplish that.

Sell Your Home For The Most Money

When you want to sell your home for the most money possible, an exclusive right-to-sell agreement is the best way.

However, picking the right real estate agent becomes crucial. The agent you choose will be in charge of pricing, marketing, putting the home in the multiple listing service, and representing your best interests.

The agent a seller chooses and their strategies to sell the house can significantly impact what ends up in a seller's pocket.

A careful interview of multiple agents is always wise.

Final Thoughts on Types of Listing Contracts

You are now up to speed on the types of listing agreements for a home seller. Your best bet will likely be with an exclusive right-to-sell agreement.

You can always consult with a real estate attorney if you have any questions about the contract you are signing. Most of the time, listing contracts are boilerplate. The terms you usually need to be concerned with are the one's an agent fills into the agreement.

Bill Gassett is an authority in the real estate industry with 38 years of experience. Bill is well respected for his informative articles for buyers, sellers, and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, the National Association of Realtors, Inman News, Newsbreak, Credit Sesame, Realty Biz News, and his own authoritative resource, Maximum Real Estate Exposure. He has been on of the top RE/MAX agents in New England over the last two decades.
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