In the world of real estate, there are different types of listing contracts that a seller can choose from when working with an agent. In this article, we will discuss the four most common types of listing contracts.
Exclusive Agency Listing
The first type of listing contract is the “exclusive agency” listing, which is not a popular option. With this type of agreement, an agent can list and market your home, but the seller can also seek out buyers on their own. The agent only earns a commission if the house sells through any real estate agent or company, which means there is no incentive for the agent to spend time and money marketing the property. Moreover, unethical buyers or sellers may try to cut out the agent, even though it was their efforts that brought the buyer to the home. If you opt for an “exclusive agency” listing, don’t expect too much from your agent.
Exclusive Right to Sell
The “exclusive right to sell” listing contract is the most common type of listing agreement, and it’s the only option if you want full service from an agent and their company. With this type of contract, your agent is the listing agent, and their job is to market your home to other agents who work with buyers. Even if you sell the home to a friend or a buyer who comes without an agent, your listing agent will earn a commission. This type of listing requires an agent to invest their time and money to advertise your home, place it in the Multiple Listing Service, market it to other agents, and potentially hold open houses. This type of listing gives the agent a realistic expectation of earning a commission.
A “one-time show” listing contract is similar to an open listing, but it’s used mostly by real estate agents who are showing a for-sale-by-owner property to one of their clients. This type of contract identifies the potential buyer and guarantees the agent a commission if that buyer purchases the home, preventing the buyer and seller from negotiating directly later to avoid paying the agent’s commission. Agents won’t spend money on marketing the home, and it won’t be placed in the Multiple Listing System.
The “open listing” contract is an option for people selling their home by owner who are willing to work with real estate agents. With this type of contract, a real estate agent can bring buyers to view your home, and if their client buys your home, the agent earns a commission. The seller can give out open listings to as many agents as they want, but agents won’t market the home or put it in the Multiple Listing Service. If the property fits the criteria for an agent’s client and it’s convenient, they may be willing to show it.
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