The Listing Contract

The listing contract, also referred to as a listing agreement, gives a licensed real estate professional authorization to act on your behalf in the sale of your home. Listing contracts vary but there are characteristics that are common to all. 

Written Document - All real estate contracts must be in writing.

Employment - The listing contract is a personal services contract between you and the broker.  It contains all of the terms and conditions of employing the broker and authorizing the broker to represent you in marketing and selling your home.

Compensation - For any contract to be valid, there has to be compensation.  The listing contract will specify the amount and timing of payment to the broker.  Typically, payment is an agreed upon percentage of the sales price, payable at closing.  It is important to note that your obligation to pay your broker may not absolutely depend on a finalized sales transaction.  For example, if the broker finds a bona-fide buyer who is willing to pay your asking price and agree to the terms you have offered, but at the last moment you decide not to sell, the broker has done his job and is entitled to be paid under the terms of the listing contract.

Title - All listing contracts will ask who has title to the property.  Property can't be sold unless everyone who holds title interest in the property are part of the sale.

Termination date - You shouldn't sign any listing contract without a specific termination date.  The most common duration is 180 days.  If the contract has an indefinite duration such as until sold, or no duration specified at all, don't sign it.  The listing contract is a legally binding document and you don't want to get locked into one with no clearly defined termination date.  If the contract expires before your home sells and you still want to keep using the same broker, you can simply sign an extension to the existing contract.

There can be and often are other elements to a listing contract.  You should have your agent review the listing contract with you in detail to be sure that you understand it.