Ch. 51 - Listing Agreements Ch. 12 PDF Listing Agreements

Once the listing agreement has been completely filled out and signed,

*the seller must receive a copy of the document at the time the signatures are obtained.* This is required by LAW. For this reason, many listing agreements are printed on multiple form stock, so that the copy can be given to the seller immediately.

Listing Termination

- Performance - The licensee has helped the seller find a ready, willing, and able buyer to purchase his or her home. - Expiration of the agreement term - The date arrives that was stated in writing on the listing agreement. - Termination - The parties either mutually agree to end the relationship or one party decides to end it.

Listing Agreement

A legally-binding contract that creates an agency relationship authorizing a broker to serve as the agent for a principal in a real estate transaction.

Consider this situation.

Agent George signed a listing agreement with the Hatfields. After three weeks on the market with just a few showings, George and the Hatfields mutually agree to extend the period of the listing. Even though the decision is mutual, it's not legal unless it is changed in writing. So how does George do that? One way to make the change, and one that is very common, is to cross out the date, write in the new date and then have all parties initial the change. If the change is a simple one, it's okay to do it that way. But a cleaner, more efficient way to make a change to a listing agreement is to use a form especially designed for that purpose. The two most common changes to a listing agreement are price changes and listing period extensions.

Listing Ownership

All of these situations have some effect on a listing agreement. Death of the broker Brokerage firm goes out of business Broker loses his or her license Listing agent transfers to a different real estate firm If the broker dies, loses his or her license, or the firm goes out of business, all the broker's listings will terminate. If the listing agent transfers to another firm, the listing agreement will stay with the original broker, unless that managing broker gives permission for the broker to take the listing with him or her.

What four components should be on every listing agreement?

An identification of the property A promise of compensation to the broker The specifics of that compensation Written document with signatures of the seller or sellers

Describe an open listing.

An open listing is a non-exclusive listing that allows a seller or buyer to engage a number of different brokers to sell or help purchase property. The broker who brings the buyer or finds the suitable property gets the commission. If the owner sells the property or the buyer finds his or her own property, no commission is owed to any broker.

If the sellers are unclear about the ownership of the property or if you just want to check for yourself, you can do it in one of these ways.

Ask the seller for a copy of the deed or other title document. Call and check with a title company in the area where the property is located. Call or visit the county tax office and check the records.

Bilateral Listing Agreements

Employment contracts - meaning that the owner hires the broker and promises to pay a commission in exchange for the broker's promise to locate a "ready, willing and able" buyer or tenant for the owner.

In most cases, it is a licensee who is affiliated with a broker who will be taking the listing and filling out the appropriate forms.

Even though this is the common practice, we can't stress enough that *the agreement is actually a contract between the managing broker and the seller.*

Basic Parts of a Listing Agreement

Every listing agreement should have at least these four components. - An identification of the property - A promise of compensation to the broker - The specifics of that compensation - Written document with signatures of the seller or sellers

Signed Written Document

In Illinois all listing agreements must be in writing and signed by the seller to be enforceable. In other words, if the agreement is not in writing, the broker could not sue for the commission if the situation were to arise.

To be enforceable, Listing agreements must be___________

In writing. Oral listings do not afford a broker any legal protection. If the listing agreement is not in writing, a broker could not collect his or her commission if the seller refused to pay.

How does a net listing create a conflict of interest for a broker?

It violates the broker's responsibility of putting the client's interests above his or her own.

Listing Signatures

It's very important that all the owners sign the listing agreement to avoid any potential problems.

Multiple Listing

Marketing service in which many brokers pool all of their listings and establish procedures for sharing commissions.

The three most common types of listings are:

Open Listing Exclusive Right to Sell Listing Exclusive Agency Listing

What are the two most common changes to an original listing agreement?

Price changes and extensions to the listing period

Broker Sara has lost her license for unprofessional conduct. What will happen to her listings?

The Department of Licensing can appoint a temporary broker to close any of Sara's pending transactions. Otherwise, all Sara's listings will terminate.

The listing agreement is a contract between whom?

The agreement is a contract between the managing broker and the seller.

Identification of the Property

The best way to identify a property is through the legal description. A street address can be and is often used, but it should be supported by the legal description, attached to the listing document. If the licensee does not have a copy of the description at the time the listing is prepared, he or she can have the seller sign it with a note on the legal description line that states the description will be provided by the agent at a later time. The agent can obtain the legal description from a title insurance company or from the seller's deed.

Net Listing

The broker agrees to sell the property in order to achieve a net price to the owner, and anything which is received above the net price is the broker's commission. A net listing is prohibited by the licensing law in many states. Note: Net listings are NOT illegal in Illinois, but they are not encouraged

Promise of Compensation

The listing agreement must contain an assurance that the broker will receive compensation and state how that will happen. The seller could stipulate that the broker will receive compensation when the buyer is found, when a contract is signed or only if the sale actually closes.

Specifics of Compensation

The listing agreement must show the broker's compensation as a fixed amount. It is usually indicated as a percentage of the sale price, but it could be a specific flat fee. As we mentioned when we talked about net listings, the compensation may NOT be indicated as whatever is left over from some net price the seller has in mind to receive.

Exclusive Agency Listing

The owner employs only one broker but retains the right to personally sell the property, and thereby not pay a commission. However, if any other real estate company sells the property, the listing broker is still entitled to the commission stipulated.

What is an important thing to remember about listing agreements?

They must be in writing to be enforceable.

Exclusive Right to Sell Listing

Under this listing arrangement, the broker employed is entitled to a commission no matter who sells the property during the listing period. (Even the Seller). Note: All exclusive listing contracts must contain a definite termination date.

What is the major difference between an exclusive right to sell listing and an exclusive agency listing?

With exclusive right to sell, the broker has the exclusive right to market the property and receive a commission regardless of who procures the buyer. With exclusive agency, the owner retains the right to find a buyer and sell the property and owe the exclusive broker no commission.

An Open Listing:

is a NON-Exclusive contract, authorizing a broker to serve as the agent for either the sale or the purchase of property. With this type of listing, a broker is not under the same obligation to perform as with other listing agreements, so an open listing is often considered to be a UNILATERAL contact. This type of listing gives the seller or buyer the right to engage any number of brokers as agents. With an open listing, all contracted brokers can market the property or search for property at the same time. BUT only the one broker who brings the ready, willing and able buyer to the seller or who finds the right property for a buyer will receive the commission. In addition, with an open listing, a seller could sell the property himself or herself and a buyer could make a purchase himself or herself without having to pay any commission to any broker.