Listing Agreements and Selling Your Home
When you work with a real estate agent, you sign a listing agreement with the agent. What many sellers don’t realize is that a listing agreement isn’t a contract to sell your home; it’s a personal service contract. You agree to pay the real estate agent to find buyers who meet the terms in your listing agreement. This can be a double-edged sword, so here’s everything you should know about a listing agreement before you sign:
A Listing Agreement is a Contract for Service
When you sign a listing agreement, you’re agreeing to pay a real estate agent a commission for finding someone to buy your home. It isn’t a contract to sell, though; it’s a contract for an agent to find you some buyers.
If an agent produces buyers who meet the terms of your listing agreement, but you decide not to sell or not to sell to those particular buyers, you may still be legally obligated to pay your agent’s commission. Keep this in mind if you’re thinking of selling, and don’t sign a listing agreement unless you want to commit to selling your home.
Loopholes in Listing Agreements
Listing agreements have two potential loopholes which you need to know and potentially use. First and foremost, never sign a listing agreement that commits you to working exclusively with an agent for more than three months. If you feel that the agent is doing a good job and just hasn’t found the right buyers, you can extend your agreement. If the agent is doing a poor job, you can try a new agent when your agreement is up.
Second, know the terms of your listing agreement and stick to them. You don’t have to accept just any buyers that a real estate agent can produce. If an agent finds you buyers who don’t meet the terms of the listing agreement, you’re not obligated to sell to them and you’re not obligated to pay a listing agent’s commission if you do sell.
