and buyers often work together
without a written contract, but the opposite is true for realtors and sellers.
On the listing side, written contracts are overwhelmingly the rule, not the
exception. A listing agreement is a
binding legal contract that shouldn't be taken lightly. The necessity of reading
the contract carefully and understanding what it means before you sign it can't
be overstated. If you need legal advice, consult an attorney.
Listing contracts vary considerably from
place to place. However, most realtors use established listing agreement forms
that are the de facto industry standard in their area or are dictated by their
brokerage company. Everything on these preprinted forms is negotiable.
Here are some basic terms to consider:
1. Term of the Agreement. A
longer agreement benefits the agent because it allows him or her more time to
find a buyer for your home. In a weak market, that's okay, but if homes are
selling quickly, you don't want to be committed to one agent for more than a few
months. If the home doesn't sell within the initial period and you're satisfied
with the agent's efforts, you can offer to extend the term of the agreement
before it expires.
2. Commission. Although
commissions are negotiable, most areas have a standard percentage that agents
expect to receive. This amount usually is 6 percent of the sales price, but you
will find agents who accept 5 percent and agents who ask for 7 percent. Whether
you want to pay the percentage that's typical in your area or negotiate a lower
rate is up to you. A lower commission will save you money. A higher commission
will give the agent more incentive to invest in marketing your home. Other
agents can find out how much commission is offered on your home through the MLS.
The agent's commission technically shouldn't be renegotiated as part of the
purchase agreement between the seller and the buyer, but some agents will give a
little to close a price gap between the seller and buyer, consequently making
the transaction viable.
3. MLS. A listing agreement
typically authorizes your agent to post your home in the Multiple Listing
Service (MLS). Unless you're selling a very exclusive property or have serious
personal privacy concerns, the MLS is a no-brainer because it helps the agent
market your home to the widest possible group of potential buyers. Today, most
MLS databases are accessible by consumers on the Internet. The public does not
have access to commission information on the listings.
4. Lockbox. A lockbox is a tiny
key-holding safe that can be inconspicuously attached to the front of your
property. Any agent who has the means of accessing the lockbox (e.g., the key or
combination) can retrieve the keys to your home, unlock your door and show your
home to prospective buyers even when neither you nor your agent is present. If
you're concerned about strangers entering your home alone, don't authorize a
lockbox. If your home is vacant, located in a low-crime area or if you've
removed your valuables and are willing to take the risk, a lockbox might be
reasonable. The more people who see the property, the better chance you'll have
of selling it for a favorable price.