If you have ever sold a house with a realtor you have signed a listing agreement. The listing agreement is a contract between yourself and your realtor’s brokerage which outlines the particulars about listing your home. The problem is that many realtor’s do not do a good job at explaining these contracts and there are several important parts that can have serious implications. Remember that the attention is in the details when it comes to contracts, for now I will give you the Coles Notes version of what you need to know.
The Duration of the contract is the biggest thing to watch out for! Realtors love getting lengthy contracts because it secures their listing, but you shouldn’t sign a contract any longer than 60-90 days. The average home is selling in under a month right now so if your guy cannot get it done in 3 months, they are not that effective. On top of that, if you are not satisfied with the service and wish to get out of the contract, the listing brokerage has the right to suspend the listing instead of cancelling it, meaning that you ARE NOT able to sell your home with anybody else until that contract expires. Pretty crap deal if you have a 6 month listing.
The List Price: Please, do yourself a favor and do not overprice your home. You will have agents overprice your home just to get the listing but you should be relying on the area sales and comparing your home to them in order to establish pricing. The method of reducing every few weeks makes you vulnerable to bully offers so I always recommend you discuss in great detail with your agent what the best list price for your home is, PRIOR to putting it in writing.
Commission Rate: Yup, it is right there on the first page of your contract so you can have that awkward encounter as early as possible. You should have had a previous meeting with your realtor outlining the services that they will be providing to get your home ready for sale. Unless you are getting value added services, you should never pay above 1.5% to list your home. Make sure you understand what commission rate is being charged before signing and do not let your realtor make you promises on the spot. It costs a lot of money to sell your home and you should have somebody representing you who is using a good amount of those resources to get your home ready for sale and expose it to a wide array of buyers.
Multiple Representation: Have your realtor explain this in full so you know if it is something you are willing to get into. Multiple representation occurs when the listing agent also represents the buyer agent as a client and owes both of you the exact same duties. The problem? How can somebody act in your best interests when they also have to act in the other persons best interests? A good way around this is explaining to your realtor you would only like them to bring a buyer to the table as a CUSTOMER, to whom they do not owe the same obligations and they can still be very helpful to you. Also make sure you clearly discuss a commission rate reduction if your listing agent is representing both parties in the transaction.
Making sure you have a good dialogue about those things will really help you when it comes to signing a listing agreement and a good realtor will explain them to you in full. If you have any questions about listing agreements or buyer representation agreements I would be pleased to give you my advice. Have a great weekend.