Do Not Simply Sign The Agreement Offered By a Realtor Without Understanding It Well

Because most people choose to use the services of a real broker to find a buyer and sell a home the subject of the real estate listing agreement is really important. It's not very interesting to most people, so the truth is they usually sign the form without paying much attention to what it says.

Good brokers and agents will explain their agreements of course, but they rarely explain the alternatives. Yes, there are alternatives available. This article is about the various types of listing agreements and how they differ from each other. The most common type of listing agreement is the one most beneficial to the listing broker. Although that might sound selfish, it's actually very practical.

An Exclusive Listing Agreement gives the listing broker (or his or her office agents) the right to collect a percentage commission on the sale of your home, at the time of closing the sale transaction. Regardless of whether your broker, one of his or her agents, or competing agents bring the buyer to the closing table, the agreement protects your broker's commission. In fact, even if you find someone to buy your home on your own, if you've signed this type of listing agreement you will be liable to pay your listing broker the stated commission.

Alternatively, especially if you have knowledge about real estate sales, such as the legal forms and procedures required for a sale in your state, and you want to retain the right to sell and close the sale on your home yourself, you could still sign a listing agreement with a broker. The particular agreement you'll need in this case is called an Exclusive Agency Agreement, which means you pay the stated commission on the sale to your broker only if she or any other agent brings you the buyer. If you sell a home yourself you don't owe a commission to anyone.

But you will have to conduct the whole transaction yourself, and that can be a challenge unless you know what you're doing. There is another alternative called an Open Listing that is not popular with brokers and agents because nobody is guaranteed a listing commission at all. If you sign this type of listing agreement with a broker you are only agreeing to pay the commission to him or to her if he or she is the person who sells your home. Technically, you'd have to sign a separate Open Listing with any broker who shows your home.

That gets complicated and time consuming for you. So that's why an agreement is so popular. It's just good to know you have options when you decide to sell a home.

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