Common practice in New York is for agents to use pre-printed forms designed by their local association of REALTORS®, or their local Multiple Listing Service (MLS). Some agencies have their own listing agreements that are drawn up by qualified real estate attorneys.
Whichever form you use, make certain that your listing agreement answers the following questions:
– When will the listing agreement begin and end? Use firm dates.
– How will the agent be compensated, and under what terms? The agreement should spell out specific payment or terms, often expressed as a percentage of commission that is to be paid when the property is sold.
– How will the cooperating agent’s commission be paid?
– What will be the list price of the property?
– Does seller give permission to:
- Post the listing on the MLS?
- Install a lockbox?
- Reveal the existence of other offers?
Can you sell a property without a written listing agreement? Sure, but you probably wouldn’t want to. Without a written listing agreement, you don’t have anyone working for you and working for your best interests. In addition, without a written listing agreement you cannot expect to receive high level service or attention because most agents will prioritize their clients over any customers or consumers that they’re working with.
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The Exclusive Right to Sell
A common form of a listing agreement is the exclusive right to sell contract. This is also the most popular form of listing contract with agents, because it guarantees that the listing agent will be paid (and how much they will be paid) if the property sells within the term of the agreement. This is true whether:
- The buyer is or is not found by the listing agency.
- The buyer is found by the seller.
The exclusive right to sell contract also prohibits the seller from listing the property with another brokerage prior to the expiration of the listing contract. It also requires the seller to allow the listing agent to show the property to potential buyers.
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Exclusive Agency
Let’s now take a look at another type of listing contract: the exclusive agency contract.
An exclusive agency agreement is an option for sellers and landlords who want to reserve the right to find a buyer or tenant themselves and avoid paying a brokerage fee, but who still want to make sure their property has the support and efforts of an experienced broker.
With an exclusive agency agreement, only one broker lists the property. If that broker or any other broker sells the property, the listing agent is owed a commission as agreed to in the agency agreement.
However, if the owner finds a buyer/tenant, the owner pays nothing. From the owner’s perspective, this is a good thing. From the broker’s perspective, it’s better than nothing, but not as good as an exclusive right-to-sell agreement because the broker can expend a great deal of time, money, and effort marketing the property and still come out empty-handed if the seller finds a buyer first.
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Open Listings
Open listing agreements are a type of free-for-all where the seller may sign a listing agreement with multiple listing agents, and yet be loyal to none. The seller will pay the agent who finds the buyer, period. Because an agent can spend a lot of time, energy, and money trying to find a buyer, only to be left empty-handed if another agent (or the seller) gets to the finish line first, this type of listing agreement is both rare and unpopular with agents. The open listing agreement is a unilateral agreement because only the seller makes a promise; the salespeople can decide to attempt to find a buyer, or not.
Cancelling a Listing Agreement
Cancellation of a listing agreement requires the signature of both parties. Sometimes sellers will change their minds about selling their property during the term of the listing agreement. This is allowable, provided the seller discusses this with you, and you agree. The parties can change or cancel a listing agreement but only when both are in agreement to do so.
Hope you find this information useful. If you have any questions about listing agreements and how they work here in Queens, feel free to Contact Us anytime 🙂
