Types of Listing Contracts

A Listing Contract is an agreement between the seller and a licensed real estate broker giving the broker the right to represent you in selling your home. There are five types of listing contracts; the most common type is the Exclusive Right to Sell. Keep you listing contracts to 60- 90 days, however, if the agent is doing a good job when the listing expires, the listing can be renewed.

An “Exclusive Right to Sell” listing is an exclusive authorization giving sole right to one broker to find a buyer for your home, though there are two very different types of exclusive listings the “exclusive right to sell” listings is the most popular type of listing with sellers and brokers

Giving a real estate agent the "exclusive right to sell" your property does not mean that there won’t be other agents involved in the process. Your agent is the listing agent and the most important part of their job is to market your home to other agents who work with buyers. Those agents will show your home to their clients. Regardless of who sells the home, even if you sell it yourself to a friend at work, your listing agent will earn a commission.

If you want full service from an agent and their company, this is probably the only type of listing they will accept. Full service means an agent will advertise your home, place it in the Multiple Listing Service (MLS), market the home to other agents, and even hold open houses. This requires an expenditure of both time and money.

The MLS is an important marketing tool for listing agents; the service distributes listing information and photos via the computer to members who are working with appropriate buyers. Most MLS listings are also available on the Internet at sites such as realtor.com, which allows homebuyers to research what is for sale on their own.

Only with an "exclusive right to sell" does an agent have a realistic expectation of earning anything on their investment in selling your home. That is why it is the most common type of listing. Of course, the agent and their company still have to perform in order to get paid and your home has to sell.

An “Open Listing" is a non-exclusive authorization for brokers to find a buyer for your property. You can give as many brokers as you wish an open listing on your house. People trying to sell their home by owners who are also willing to work with real estate agents mostly use this type of listing.

Basically, it gives a real estate agent the right to bring buyers around to view your home. If their client buys your home, the agent earns a commission. There is nothing exclusive about an open listing and a home seller can give out such listings to every agent who comes around.

For that reason, no agent who accepts an open listing is going to market your home or put it in the MLS. If your home fits the criteria for one of their clients, and it is convenient, they may be willing to show it to their client. That is all an "open listing" is good for.

Another type of listing is called the “One Time Listing" agreement this is similar to an open listing in many respects.  This is an agreement whereby a For Sale By Owner (FSBO) agrees to let an agent show the home to an interested client and pay a commission to the agent if that showing results in a sale.  The purpose being to prevent a seller from letting an agent show the property, then deal directly with the client, to avoid paying any commission.

As with an open listing, agents will not be spending money on marketing your home and it will not be placed in the MLS.

An "Exclusive Agency Listing" allows an agent to list and market your home, guaranteeing them a commission if the house sells through any real estate agent or company. It also allows sellers to seek out buyers on their own. This is similar to the right to sell listing, with the significant difference that you reserve the right to sell your home yourself and not pay the broker a commission. This is not a popular type of listing agreement.

The reason an "exclusive agency" listing is unpopular is because there is no incentive for your agent and their company to spend money and time marketing your home. If you come up with your own buyer, they have spent money and time that cannot be earned back through the real estate commission.

Also, it is too easy for greed and a lack of ethics to enter the picture. Some unethical buyers or sellers will try to cut out the agent, even though it was an agent's efforts that brought the buyer to the home.

If you find an agent willing to accept such a listing, do not expect too much from them. They will probably just place it in the MLS and sit around to see if something happens.

The "Net Listing" can be a dangerous and is illegal in some states. Under this agreement, the seller tells their agent the net price they want for their home. The listing agent can then add the desired commission onto this net price when presenting it to buyers. If the agent obtains a purchase offer far above the seller's net listing price, the seller may feel cheated and accuse the listing agent of not disclosing the home's true market value. Or, if the agent receives a low purchase offer close to the net price, yielding the listing agent little or no commission, the agent might be tempted to not present the offer to the seller. A better alternative to a net listing is an exclusive right to sell with a listing price at the amount the seller wants to net, plus the listing agent's sales commission.

A real estate listing contract is a legally binding agreement that sets out the rights and duties of the seller and the agent. However, if you are having issues with the listing agent and feel that you want to cancel the agreement tell the agent or the broker that you want to cancel your listing. Often they will let you cancel easily, since they do not want to build ill will in the community.  If they won't, you can always pull your home off the market, all listing contracts have expiration dates just wait until the listing contract expires.