Chapter 2: types of listing agreements

Open Listing (non-exclusive listing)

* Seller pays agent commission only if agent was the procuring cause of sale. * Seller can have more then one agent try to find a buyer. Whoever finds the buyer is the procuring cause of sale. * procuring cause: person who finds buyer and negotiates sale.

After the three-day rescission period has ended, circumstances may change or information may come to light that makes the information in the disclosure statement inaccurate. When this happens, the seller has two choices.

1. The seller can give the buyer an amended disclosure statement. This reactivates the three-day rescission period. Or 2. the seller can make the necessary repairs or take other action that will make the disclosure statement accurate again. The corrective action must be completed at least three business days before the closing date. (Otherwise the closing would have to be delayed to allow for a new three-day rescission period.)

Legal requirements for a valid listing agreement

A listing agreement must include all the basic ingredients of a contract: competent parties, offer and acceptance, consideration, and a legal purpose.

Working under a net-listing arrangement

A net listing provides that the seller will get a certain amount of cash from the sale, and the real estate agent will get anything over that net amount.

ready, willing, and able buyer

A ready, willing, and able buyer is one who makes an offer on the seller's terms and who's financially able to complete the transaction.

It's customary for the seller to pay for the buyer's title insurance policy, since it's the seller who's promising that she's capable of transferring marketable title to the buyer.

And since excise tax is a tax on the sale of property, it's generally the seller who pays the tax.

Listing input sheet

Every MLS listing agreement form has an input sheet. This is the portion of the form that provides specific information about the listed property.

language typically found in an exclusive right to sell agreement

First, like an exclusive agency listing, an exclusive right to sell listing includes a clause granting your brokerage the exclusive right to submit offers to purchase to the seller. *Another paragraph in the agreement explains the seller's obligation to pay your brokerage a commission. The seller agrees to pay a commission if: a) the seller sells the property and the buyer doesn't back out before closing, or b) the firm procures a ready, able, and willing buyer.

Seller disclosure statement

If a buyer doesn't receive a disclosure statement (and hasn't waived the right to receive one), he can rescind the purchase and sale agreement at any time up until closing.

Open listing

If another agent finds a buyer for the property, you aren't the procuring cause and you won't get the commission. That's also true if it's the seller herself who finds the buyer.

hold harmless clause

If you and your brokerage firm get into legal trouble because the seller wasn't entitled to sell the property, or because property information provided by the seller wasn't correct, the seller will be obligated to reimburse the brokerage for expenses incurred.

If the property's in a subdivision, fill in the lot and block numbers and the name of the subdivision. Then check a box to indicate which map book you're using. In this case, it's a Thomas Brothers map book.

Include the page number for the map showing the seller's property, and also the top and side coordinates for finding the property on the map.

Paragraph 4 includes an extender clause, sometimes called a safety, protection, or carryover clause.

It provides that the seller must also pay the commission if he sells the property within six months after the listing agreement expires to someone who learned about the property through you or your firm during the listing term.

Exclusive right to sell listing agreement

One agent (broker) is hired; broker receives a commission regardless of who finds the buyer for the property

Brokerage authority and compensation

Secondly, a listing agreement must give the brokerage firm authority to market the property on the seller's behalf, in exchange for compensation (usually a percentage commission). The brokerage firm earns the commission if it finds a ready, willing, and able buyer.

Exclusive Agency Listing

Seller pays listing agent if any agent finds the buyer, but not if the seller finds the buyer

This provision helps protect you from buyers and sellers who might put off signing a purchase and sale agreement until the listing expires in order to avoid paying a commission.

The seller may have agreed to sell the home for less than the present asking price if the buyer will wait. So the delay would save both of them money. The extender or safety clause is designed to protect you from that kind of arrangement.

The last requirement for a valid listing agreement is that it be in writing and signed by the seller

The statute of frauds requires all listing agreements to be in writing and signed.

And here's the clause explaining the seller's obligation to pay your brokerage a commission. The seller agrees to pay a commission under two conditions: one, if you find "a buyer on the terms in this agreement, or on other terms acceptable to Seller," and two, if "Seller through any other real estate licensee during the term hereof, sells the property."

Thus, if any real estate agent—you or another agent—finds a buyer for the property, the seller owes your brokerage the commission.