What is a Listing Agreement?
(Click here for Wikipedia’s definition)
Listing Agreement (sometimes referred to as “Brokerage Agreement”) is a binding legal contract between a home seller and a state licensed, real estate brokerage company (Seller’s Agent), which creates an “agency relationship” between the two (2) parties.
Agency relationship refers to the legal concept whereas a principal (home seller) engages an agent (Seller’s Agent) to act in his/her best interest while performing services on his/her behalf.
Once a Listing Agreement is executed, a Seller’s Agent owes certain “fiduciary duties” to the home seller that they represent. Fiduciary duties are obligations to act in the client's best interests. Those duties include:
- Exercising reasonable skill and care in representing the client and carrying out the responsibilities of the agency relationship
- Following any lawful instructions of the client
- Using his/her best efforts in performing duties
- Remaining loyal to the client's best interests
- Disclosing all material or important facts to the client
- Accounting for the client's money and property
- Keeping information confidential as required by state law or regulations.
Listing Agreement generally includes the following:
- Length of the listing period
- List price
- Terms of sale
- The amount of the commission
- Any exceptions to the commission
As well as, the specific responsibilities of the Seller’s Agent, such as:
- Showing the house
- Conducting open houses
- Marketing the house
- Negotiating with the buyer
- Preparing the contract of sale
- Representing you at the closing
A home seller should pay very careful attention to the Listing Agreement and have it reviewed by a lawyer, if so desired.