There are three main types of listing contracts typically used for the sale of a piece of real property, such as a home, condominium, vacant land, etc. Ensuring that you enter into the right type of listing contract with your real estate agent is extremely important because it will determine when and how much you must pay the real estate agent commission for selling your home. The three types are as follows:
Exclusive Right to Sell Listing Contract: Under an Exclusive Right to Sell Listing Contract, the seller would owe the real estate agent who lists the home commission if the seller receives an offer to buy the home in the amount of the list price, or when the seller accepts an offer that is for less than the full list price but all other contingencies are met. It would not matter if another real estate agent generated the offer or even if the offer wasn’t generated by anyone at all, because the seller entered into an Exclusive Right to Sell Listing Contract, which gave the listing agent the exclusive right to sell the home and receive the commission.
Exclusive Agency Listing Contract: The Exclusive Agency Listing Contract is similar to the Exclusive Right to Sell Listing contract in that the seller would owe the real estate agent who lists the home commission if the seller receives an offer to purchase the home in the amount of the list price, or when the seller accepts an offer for less than the full list price but all other contingencies are met. The difference with the Exclusive Agency Listing contract is that the seller would not owe commission to the listing real estate agent if the offer was generated by the seller’s own efforts. This type of listing contract allows the seller to market her own home and avoid paying a commission if she generates the offer.
Open Listing Contract: Open Listing contracts are frequently used by people who want to sell their home “by owner” but will work with a real estate agent who has a buyer for the property. If the real estate agent shows the property to a potential buyer and that potential buyer ends up purchasing the property, then the seller would owe that real estate agent a commission. The benefit to this contract is that it is non-exclusive so the seller could enter into an Open Listing Contract with multiple real estate agents, which could increase the chances of finding a buyer.
Most real estate companies have pre-set listing contracts they prefer to use, so if you’re selling your home, make sure you review the contract thoroughly to ensure you understand your duties and rights under the contract. If you have any questions or concerns, you should contact an attorney to explain the provisions and possible negotiate the terms on your behalf.