Definition of Listing Agreement:
1. Listings are personal service contracts between the broker and the principal
2. Listing creates an employment contract
3. Most states require listings to be written to be enforceable in court (Statute of Frauds)
Types of Listing Agreements:
1. The listing agreement belongs to the Listing Broker, not the sales person who took the listing. The listing agreement terminates with the death of the Listing Broker or the Principal. (Some real estate companies use a corporate form of ownership to avoid losing a listing as a result of the death of the broker) The listing agreement does not terminate with the death of the sales person who took the listing.
2. Open Listing: An open listing is also referred to as a non-exclusive authorization to sell. A principal can provide any number of brokers with an open listing agreement, but is only liable for paying a commission to the broker who finds a “ready, willing, and able” buyer subject to the terms and conditions of the listing agreement. The broker who finds a buyer under this type of listing agreement is referred to as the “procuring cause”. When a buyer is found, all other open listings are automatically terminated, with or without notification of such termination by the principal. Under an open listing agreement, the property owner retains the right to sell of his or her own efforts without any liability for a commission to anyone else.
3. Exclusive Right To Sell Listing: Under an exclusive right to sell listing agreement, the listing broker has the exclusive right to act on behalf of the principal and will receive a commission regardless of who sells the property (including the owner) during the listing period. The principal employs only one broker.
4. Exclusive Agency Listing: Under an exclusive agency listing agreement, the listing broker has the exclusive right to act on behalf of the principal and will receive a commission regardless of who sells the property (with the exception of the owner) during the listing period. The principal employs only one broker.
5. Net Listing: Under a net listing agreement, the listing broker is entitled to any amount above the agreed upon sales price. Net listings may be an open listing, an exclusive right to sell, or exclusive agency listing. Generally, net listings are discouraged as they do not always appear to be in the best interest of the principal. Net listings are illegal in some states, and unethical in most other states.
The Listing Contract:
The listing contract includes the following information:
Type of Agency created
Date of listing period
Broker’s authority and responsibilities
Names of all the parties to the contract
Real Property and Personal Property descriptions
Broker protection clause
Signatures of parties