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A Guide to the Various Types of Listing Contracts

While there are always exceptions to the rule, most people looking to sell don't want to take on the responsibilities of marketing their home themselves, and prefer to partner with a broker by means of a listing contract. This contract is an agreement between the seller and an agent or agency that assigns to the agent or agency the right to market the home on the homeowner's behalf.

Listing Contracts Guide

Listing contracts benefit both sides of the agreement. Homeowners get professional marketing services and advice, while commissions on the sale price go to the listing agent. Typically, commissions for a listing agent are around three percent of the final sales price.

Three Types of Listing Contracts

The most common form of listing contract is the "Exclusive Right to Sell" agreement. This type of contract recognizes the agent as the sole representative of the seller and the only person with a right to the commission. Even if you have a friend who wants to buy the home, you will still owe the full commission amount to the agent. An exclusive right to sell contract is most appropriate for homeowners who don't have any initial leads through friends, family or co-workers. In return, the listing agent will market the home through every channel available, including the Multiple Listing Service (MLS), local newspapers and magazines, websites, phone calls to other brokers or mail distribution.

There are two other types of listing contracts: exclusive agency and open agency. Both of these contracts guarantee commissions to the agent if the agent finds a buyer, but reserves to the homeowner the right to find buyers himself, in which case the owner pays no commission. With an exclusive agency contract, the seller works with only one agency. With an open agency contract, any agent can attempt to sell the home and collect the commission. These types of contracts give the seller more flexibility, but the agent is less motivated to try to sell the home, since there is no guarantee of any commission.

Which Contract Is Right for Me?

The most appropriate type of listing contract depends on your goals as a seller. Many homeowners try to sell a home on their own, only to sign with an exclusive agent months later, when the home has sparked little interest in the interim. An exclusive right to sell contract always give the agent the most incentive to sell the home, and a quick sale for a good price is often well worth the cost of commissions.

For more information on listing contracts and the Tampa Bay real estate market, contact we always put our clients first.