The
listing agreement is a contract between the seller and the listing
broker. It sets
out the conditions of the listing. While the details of the agreement
should be negotiated, a listing agreement generally includes the
following:
a)
The length of the listing period
-- as the seller you'd want to be able to switch brokers if the
sale does not happen as quickly
as you like, while the broker wants to have the listing period
as long as possible, recognizing that it often takes a fair amount
of time and effort and expense to generate other broker interest
and a sale, and that if the time is too short s/he loses the commission.
b) The desired sales price, as well as a price that might be accepted.
c)
The
amount of the commission -- while the commission rate is generally
claimed to be "standard" within a community, don't believe
it, and it is sometimes possible to negotiate different rates up
front -- such as 2% to the listing broker and 3% to the selling
broker. However, if the rates are too low, the listing broker may
not want to do all that is necessary to "push" your house,
such as advertising it heavily, while the selling broker may prefer
to sell her prospects a home that carries a higher commission than
she'd get on your home.
d)
any exceptions to the commission. For example,
would there be a reduced fee (or no fee at all) if you sell the
house on your
own, or you sell it to a friend who expressed interest? Generally
the broker will insist on you naming any such persons in the
listing agreement.
The seller should pay very careful attention to the listing agreement,
and probably should have it reviewed by a lawyer. It is a critically
important document to the seller. Once a broker produces a willing
and able buyer, assuming all conditions are met, the seller owes
the broker his or her full commission. If for any reason the seller
chooses not to sell (perhaps s/he wants to hold out for more money,
or a proposed job transfer falls through), the commission must
still be paid.
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