Listing contract
A listing contract is a contract to list some
real estate by a real estate agency (or brokerage)
as being offered for sale at a given listing
price. It is a contract which is agreed to and
signed by a real estate agent/broker and the
owner(s) of the property (real estate) who want(s)
to sell it. The contract is often referred to
as a listing agreement. Upon listing the property,
the real estate agency tries to get (or find)
a buyer for the property. In consideration of
the brokerage successfully finding a satisfactory
buyer for the property, a real estate broker
anticipates receiving a commission (fee) for
the service the brokerage provided.
Contents
* 1 Commission
* 2 Listing price
* 3 Expiration date
* 4 Types of listing contracts
Commission
Although the terms of the contract could vary,
usually the payment of a commission to the brokerage
is contingent upon:
* the successful negotiation of a purchase
contract between a satisfactory buyer and seller
and the subsequent ability and willingness of
the buyer to close the deal, or
* finding a satisfactory buyer who is ready,
willing, and able to pay the full listing price
(or more) for the real estate for sale without
any contingencies.
If the seller refuses to sell the real estate
when one of the above two conditions applies,
it is typically considered that the real estate
agent has done his job of finding a satisfactory
buyer and the seller must still pay the commission,
although the details are determined by the listing
contract. If the buyer cannot or does not buy
the property, then the brokerage has not yet
done its job and the seller does not yet owe
the broker a commission.
The commission is usually a percentage of the
sales price of the property ranging from perhaps
a couple percent to about 10%, but usually in
the range of about 3 - 7% for houses. The commission
could also be a flat fee or some combination
of flat fee and percentage, particularly in
the case of lower-priced properties, vacant
lots, or other unusual real estate. Again, the
details are typically determined by the listing
contract. The commission is paid by the seller
to the listing real estate broker, who will
compensate his/her listing agent and any other
brokers/agents from this commission by a separate
agreement with them.
Listing price
The listing contract typically also includes
a listing price for the property and an expiration
date by which the contract expires (ends). However,
the property may be sold at a lower or higher
price. If the seller agrees to and successfully
sells (i. e. closes the deal) the property at
a lower price, the seller must still pay the
broker a commission, although a percentage at
a lower price would result in a proportionally
lower commission. If the seller does not accept
a price lower than the listing price, then the
broker will have to wait until a satisfactory
sale to earn the commission. If the price obtained
is higher than the listing price and the commission
is based on percentage, then the broker is paid
a proportionally higher commission. Furthermore
as mentioned before, if the price offered is
equal to or higher than the listing price by
a ready, willing, and able buyer (without contingencies),
then the broker has earned a commission and
the seller must pay it regardless of whether
the sellers sells the property. In practice,
if multiple offers are presented, the seller
may accept whichever offer is most suitable
to him/her even if the price is not highest,
and the percentage commission will paid according
to the accepted price. The seller, often in
concurrence with the real estate agent, may
choose to accept an offer that is lower than
the highest for various reasons, such as terms
or contingencies in the purchase contract offered
or perceived differences in financial qualification
of the competing buyers.
Typically, the real estate agent has the experience
and data to determine a suitable listing price
for the seller's property and will recommend
a listing price to the seller. The seller can
accept, reject, or try to negotiate a different
listing price for the contract. If the seller's
price is unrealistically high and the agent
cannot convince the seller otherwise, the agent
can decline to list the property.
Expiration date
Listing a property commonly incurs certain
expenses for the listing broker and takes some
time and effort for the listing salesperson.
To make it worthwhile for them, they want a
certain minimum listing time period to have
a good chance of selling the property. However,
the listing contract must have an expiration
date. A typical listing period is often from
3 or 4 months to 6 months until the listing
expires. If the property is not sold or under
a purchase contract by then, the seller may
decide to re-list the property, perhaps with
a different listing price, with the same or
a different broker or agent, or not list it
at all. The listing of the property can start
at a date later than the date the listing contract
is signed to allow the seller time to prepare
the property for showing or sale.
Types of listing contracts
There can be several types of listing contracts:
* Exclusive right to sell - The seller must
pay the agency (brokerage) a commission if,
by the expiration date in the listing contract,
the real estate is sold, regardless of whether
the buyer is gotten through the agency or not.
Even if the seller finds the buyer him/herself,
a commission is still owed to the agency. Furthermore,
the seller cannot list the property with any
other agency until the listing expires with
the property unsold.
* Exclusive Agency - The seller can only list
the property with one agency (brokerage) until
that listing expires with the property unsold.
The seller must pay the agency a commission
if the real estate is sold to a buyer gotten
through the agency. If the seller finds the
buyer him/herself, the seller does not have
to pay the agency a commission.
* Open Agency - A seller can list the property
with more than one agency (brokerage) in open
agency listings. The seller must pay a commission
to that agency which finds the buyer that the
real estate is sold to. If the seller finds
the buyer him/herself, the seller does not have
to pay any agency a commission.
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Now
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.
