One of the most frequently asked questions that real estate agents receive is: ‘How long…
Finding the right real estate agent is a process that involves several steps. After interviewing several potential candidates and thinking long and hard about which one to choose, the next step is to sign a listing agreement. Before you get to this step though, you’ll want to ask as many relevant questions as you can think of to ensure that you find the right agent.It’s also helpful to compare a wider range of agents before you even get to the interview stage. Because finding a good real estate agent can make or break your sales experience, you want to conduct all the research that you can before you enter into an agreement. You can get started with this process by using LocalAgentFinder, to receive and compare agent proposals.After looking at all your options carefully, you’ll be ready to get to the listing agreement stage. There are three main types of real estate listing agreements that most sellers will end up choosing from: Open Listing Agreements, Exclusive Right to Sell Listing Agreements and Exclusive Agency Agreements.
The best option will depend on the amount of the tasks involved in selling your home that you will be able to complete on your own, as well as the current market conditions.
Open Listing Agreement
This type of listing agreement puts more of the selling responsibility in the hands of the property’s owner. An Open Listing Agreement is non-exclusive, so a seller can potentially have open agreements with a variety of estate agents. When the property sells, you only pay a commission to the real estate agent who brought you the offer you accepted.
The seller usually only has to pay about half of the fees that would be associated with other types of listing agreements, because they are not represented by a specific agency. They are simply hiring real estate agents to find the buyers and end up doing much of the other work on their own. Another benefit of an open listing agreement is that if the seller brings in their own buyer, they don’t have to pay a commission at all. For this reason, most full-service real estate agents prefer not to take part in open listing agreements.
Exclusive Agency Agreement
Unlike the open listing agreement, in an exclusive agency agreement the real estate agent will represent the seller. The seller still retains the right to sell the property on their own and not pay the agent’s commission fees.
Exclusive Right-to-Sell Listing Agreement
This is the most common type of listing agreement. In an exclusive right-to-sell listing agreement, a real estate agent is given the exclusive right to represent the seller and find a buyer for the property. They could do this by making the sale through their own agency or going through a networked real estate agency. As a result, the seller pays a larger commission, because the agent is actively working on selling and representing the property.
The owner cannot sell the property without paying this commission, unless an exception is listed within the contract. One exception could be if a family member or neighbour shows interest in buying the home. In this case, the real estate agent may offer a specified time frame for the seller to produce a contract with this acquaintance before they would incur any fees.
There are a few other terms and conditions to consider when you are looking at listing agreements, be sure to ask your real estate agent about them.
Length of the Listing Agreement
The length of a listing agreement will be by you and your real estate agent when you draw up the contract. In most cases, you’ll be able to choose from 30 days, 90 days, six months, or one year.
The Commission Rate
Another negotiable aspect of the listing agreement is the real estate agent’s commission fee (and structure). Rates can depend on a variety of factors including the current market conditions, supply and demand in your suburb, location and the size of the real estate agency. The fee will also depend on the degree of marketing effort that the agent expects to put into the sale.
For example, in a ‘cold market’ where the supply of homes far outnumbers the number of available buyers; you can expect to pay a higher commission rate. The real estate agent would have greater incentive to put your home in the priority position and make a sale. On the other hand, if you are selling in a ‘hot market’ and there is plenty of competition from buyers eager to purchase a limited volume of properties; you could angle for a lower commission rate to get this same sense of urgency from your agent.
Cancelling a Real Estate Agreement
Be wary of any contract that doesn’t give you room for cancellation. If your real estate agent is unwilling to put a specific clause into the contract that allows you to end your agreement should you be unhappy with the quality of service that has been provided, then you should assume that you will become unhappy later and consider a different agent. By including this type of clause, the agent is essentially giving you a guarantee of high quality service. With this type of contract, the agreement length is rendered nearly irrelevant.
Choosing an Expiry Date for Your Listing
If a real estate contract has run its course and no sale has been achieved, then both parties may decide not to renew it. Real estate agents could offer to give the seller a list of potential buyers that they collected during the selling process. In some contracts, it’s stated that if one of these potential buyers end up purchasing the property in a specified amount of time after the contract’s expiration, then they will still receive some form of commission.
These are a few of the aspects to consider when you are signing a listing agreement. Be sure to discuss all of your options carefully and think about what would best suit your individual situation. Choosing the right real estate agent to work with is also important. Register now at LocalAgentFinder to see what’s out there and find a high quality agent to sign an agreement with.
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