The basic categories of agreements for listing properties for sale are the “Exclusive Right-to-Sell Listing”, “Exclusive Agency Listing” and “Open Listing”. You will need to understand the listing terms no matter which type you choose. Knowing the listing duration is important to know, as well as the commission particulars for selling the property, what will happen after the contract expiration date and knowing how to, if necessary, cancel the contract.
How do you differentiate the listings of Exclusive Right-to-Sell and Exclusive Agency?
The agency broker will represent the property owner in the Exclusive Agency listing. The owner of the property does reserve the right to sell the property themselves without having to pay commission to the agency but the agency broker has the right to bring in another agency to sell the property for the owner. The agency that is hired by the first agency will receive a commission, then the actual listing agency will receive a commission for holding onto the listing. The Exclusive Right-to-Sell listing is basically the same where the listing broker can bring in another agency to help sell the property with both receiving a commission that the seller pays but the difference is the owner of the property has to pay a commission even if they sell the property themselves. Any exception to this must be writing and added to the agreement contract.
Is the Open Listing a better option?
It is possible that this is a much better option because of the flexibility. However, the owner should keep track of a great deal in the home’s sale. The Open Listing means the owner of the property has the right to sell the property themselves or has the right to use other agencies under the same type of contract and will only have to pay commission to the agency that actually sells the property. Because of this, Open Listing means that this agreement will be considered non-exclusive. This is a type of contract that means the owner only pays commission to the selling agency and not the listing agency, as well, so this helps save some money. The owner then pays money to the broker, not to represent themselves, but to the buyer. If the owner finds their own buyer there is no need to pay any broker fees. Most of the agencies one works with will not prefer this style of listing agreement.
What do I need to look for in a listing agreement?
The listing agreements can run for as short or as long as necessary – which, could be just four weeks or over a year. Make sure that you have a clear understanding of the agreement, most importantly the duration. The agencies requirements and the location of the property all make a difference on the commission that you are offering for selling this property. In most areas today with the economy the way it has been there are a lot more homes for sale than there are qualified buyers. Because of this, it may be a good idea to provide or offer a higher commission to the selling agent than what is normally offered. The agency that actually sells the property needs a higher commission as an incentive to push your property over some of the others in your area. You can split the commission however you want because it is your money. Remember, that by doing this, there will not be as much money provided to the listing agent. It is possible that the listing broker will not be the person who ends up selling your own property.
Understand that you might want to have the option to cancel the contract if your listing broker does not hold to their end of the deal. Check this before you sign on the dotted line. Once the contract does elapse, you will have the opportunity to get a listing of the names of all the parties who are interested that is held by the listing agency. If you end up selling your property to one of these other interested buyers, then it is possible that you still owe commission. This way, you will want proof that the listing broker was the origination for the buyer.
Download a debtor education course and learn more about chapter 7 bankruptcy.
|
|