Lesson 8 - Listing Agreements

Commission Provisions

- - cannot be pre-printed

ready, willing, and able buyer

-If someone offers to buy the property on those terms, that buyer meets the ready and willing requirement - financially able - However, if the failure to close was because of the buyer (such as the buyer applied for but wasn't able to obtain financing) then the buyer wasn't actually "able" and the seller doesn't owe a commission. A seller is generally required to pay the listing brokerage a commission only if a ready, willing, and able buyer is found during the listing period. A ready, willing, and able buyer is one who makes an offer that meets the seller's stated terms and who has the financial ability to complete the purchase.

Listing Agreement

-When property owners hire a real estate firm to handle the sale of the property, they sign a written contract that will govern their relationship in the transaction. -The listing agreement sets forth the rights and responsibilities of each party to the contract. -Note that the parties to this contract are the seller and the real estate brokerage.

Three sections of listing agreements:

1. How commissino is earned 2. types of listing agreeements 3. Essential elements of a litsting agreement and the provisions of a typical listing form.

Three requirements of earning a commission:

1. The firm had a written listing agreement with the seller. 2. The firm and its agents were licensed before offering services or procuring a promise of compensation. 3. The firm and its agents met the terms of the listing agreement with the seller.

Elements of a valid listing agreement

1.Identify Property 2.Authorized the brokerage to sell the property and provide for the compensation 3. be in writing and signed by the seller

There are three types of listing agreements

: open listings, exclusive agency listings, and exclusive right to sell listings. We'll begin with open listings.

Distressed home conveyance

A distressed home conveyance is one in which a buyer purchases property from a distressed homeowner (that is, one facing foreclosure), allows the homeowner to occupy the property, and promises either to convey the property back or to convey an interest of the proceeds. The Washington Distressed Property Law strictly regulates these transactions.

Open Listing

A property owner may give open listings to as many brokerages as the owner wants to. -Because of this, an open listing is also called a nonexclusive listing. -An open listing is considered to be a unilateral contract, because only one party, the seller, has promised to act.

Exclusive listing

An exclusive agency listing or an exclusive right to sell listing can only be given to one firm at a time. To claim a commission under an exclusive listing, the firm may be required to show that it exercised due diligence in trying to find a buyer for the property.

Rental or option provisions

As a result, many listing forms prohibit the seller from leasing the property or granting an option on it during the listing term. - seller owes entire comission if provision is broken

Receipt of copy

At the time the listing agreement is signed, the agent should give a copy to the seller. - it's a requirement of the real estate license law

Signatures on the listing

Both seller and broker sign

With this listing, the seller agrees to list with only one brokerage, but retains the right to sell the property himself without being obligated to pay a commission.

Exclusive agency

This listing is preferred by most brokerages because it provides the most protection for the brokerage.

Exclusive right to sell

A property owner who wishes to grant an agent the authority to actually sign a purchase and sale agreement on behalf of the owner can do so with a standard exclusive right to sell listing.

False

A real estate agent can enforce an unwritten listing agreement if she has at least two witnesses to the agreement.

False

Although it is not a legal requirement, it is good business practice for the listing agent to give the seller a copy of the listing agreement when it is signed.

False

As a rule, it is the listing agent's responsibility to complete the seller disclosure statement and submit it to the seller for ratification as soon as possible.

False

If the seller accepts an offer for less than the asking price, he is obligated to pay a commission to the brokerage, but he can subtract from the commission an amount equal to the price reduction.

False

In Washington, a listing agreement must have a termination date.

False

In most cases in Washington, a cooperating agent acts as the agent for the seller.

False

The listing agreement creates an agency relationship between a broker and the property owner.

False

Procuring Cause

If a firm performs services for a seller under an open listing agreement, the firm earns a commission on a sale only if it was the procuring cause of the sale.

Damages if buyer breaches

In practical terms, this usually means the listing agent is entitled to half of the forfeited earnest money.

Property description

It's good to get a complete legal description at this point, since it will be needed later for the purchase and sale agreement and for the new deed. - can be attached seperately See exhibit A on form

Agency Disclosure

It's in this clause that the seller authorizes the brokerage to appoint an affiliated licensee to act as the seller's agent. - The provision also states that other agents working for the firm (who have not been named in the listing agreement) do not represent the seller and may represent the buyer.' 1Seller authorizes brokerage to appoint seller's agent 2No agency relationship between seller and brokerage's other agents 3Brokerage's other agents may represent the buyer

Extender Clause

It's intended to prevent the seller from avoiding liability for the commission by waiting until after the listing expires to accept the buyer's offer. -the extender clause may require the seller to pay the commission if the property is sold during the extender period to anyone who first learned about the property in any way connected with the brokerage or a cooperating agent. -

Agency law pamphlet

Many listing agreement forms also include a provision in which the seller acknowledges receipt of a copy of a pamphlet on Washington's real estate agency law.

Cooperating Agents

Memebers of the MLS - A cooperating agent may act as a seller's agent or a buyer's agent, or in some other capacity agreed to by the parties. In most cases, cooperating agents act as buyer's agents.

The term "procuring cause" is most closely associated with this type of listing.

Open listing

The type of listing that does not require due diligence on the part of the brokerage.

Open listing

Closing Cost

SEller pay for some -Most listing agreement forms have a provision specifying that the seller will pay these costs.

Short Sale

The proceeds from the sale aren't enough to repay the lien against the property; nevertheless, the lender agrees to accept the proceeds and release the borrower from the debt. -When a potential short sale is listed, the listing agent should disclose to the seller that the lender's approval of a short sale doesn't relieve the seller of liability for costs owed at closing, including the brokerage commission.

Seller Warranties

The seller warrants that: -the seller has the right to sell --the property as offered, -the property information provided in the listing is correct, and -there are no encroachments on the property.

Hold Harmless Agreement

There's usually a clause in which the seller agrees to indemnify the brokerage for any losses that result from mistakes or omissions in the information provided by the seller.

Distressed Property Law

This law protects homeowners from foreclosure rescue scams and strictly regulates people working as "distressed property home consultants."

A clause in a listing agreement in which the seller takes responsibility for any losses caused by errors or omissions in information provided by the seller is called the hold harmless agreement.

True

A ready and willing buyer is considered "able" if he has capacity to contract, and has enough cash to buy the property on the agreed terms or is qualified for the financing necessary to complete the purchase.

True

Generally, once a ready, willing, and able buyer has been found, the agent has earned the commission, whether or not the sale is ever completed.

True

If a listing prohibits a seller from leasing the property during the listing term, and the seller violates this provision, the seller is liable to the brokerage for the entire commission.

True

The agency provision found in most listing agreement forms states that other licensees working for the same firm as the listing agent do not represent the seller and may represent the buyer.

True

When a buyer makes an offer on terms other than those set forth in the listing agreement, the seller can turn down the offer without becoming liable for the brokerage's commission.

True

While the listing agreement is a contract between the seller and the real estate firm, its provisions also apply to the broker handling the listing as a subagent.

True

The extender clause is a provision in the listing agreement designed to prevent a seller from avoiding liability for the commission by waiting until after the listing expires to accept a buyer's offer.

True - It is intended to prevent the seller from delaying acceptance of a buyer's offer until after the listing expires in order to avoid paying a commission.

Exclusive agency listing

Under an exclusive agency listing, the seller must pay the brokerage's commission if anyone other than the seller finds a buyer during the listing period.

Exclusive right to sell lisitng

Under an exclusive right to sell listing, the brokerage gets the commission if the property sells during the listing period. This is true no matter who found the buyer, even if it was the seller.

An agent worked hard to find a buyer, but the seller was responsible for the sale of the property. The agent was still entitled to a commission. Which type of listing could this be?

exclusive right to sell

Brokerage's Authority

identification of the real estate firm, and a description of the agency authority granted to the firm. EX "The sole and exclusive right to submit offeres to purchase." -Note that in spite of the term 'exclusive right to sell,' this provision doesn't authorize the brokerage to actually sell the property. !- IT only authorizes the firm to solicit offers for the property.

Keybox

is a device that holds a copy of the house key, which the seller can padlock to a porch railing or some other appropriate location when the seller isn't going to be home.

To be eligible for a commission with this type of listing, a brokerage must have been primarily responsible for bringing about the sale.

open

Multiple listing service (MLS)

s a regional association of real estate firms (and their agents) who share information about their exclusive listings. The purpose of an MLS is to reach a greater number of potential buyers with information about listed properties. When a real estate firm submits a listing to the MLS, any one of the member firms may seek buyers for the property.

Net listing provision

states the net amount the seller will accept from the sale of the property. - Net listings are frowned on in Washington; they are entirely illegal in some other states.

Attorney's fees provision

stating that if the parties end up in a lawsuit over the contract, the losing party will have to pay the prevailing party's court costs and attorney's fees.

termination date

the date on which the brokerage authority will end

Liability for two comissions

the extender clause in many listing agreement forms provides a safeguard for the seller that prevents liability for two commissions.

Earning the commission

the listing agreement should spell out the conditions under which the brokerage will be entitled to the commission.