Details
of a Listing Contract
Obviously the name of the seller and the property address
will be included in the listing contract. There are many other
things that are included, too, and you should be aware of
them.
Price and Terms of Sale
When setting the terms of sale, the main thing you are concerned
with is the price. You should have a basic idea of what your
home is worth by keeping track of other sales in the neighborhood.
Plus, you have probably interviewed at least two real estate
agents and they have given you their own ideas. Exercise great
care in determining your asking price, making sure not to
set it too high or too low.
In addition to the price, you will disclose what personal
property, if any, goes with the house when you sell it. Personal
property is anything that is not attached or fixed to the
home, such as washers, dryers, refrigerators, and so on.
There may be some item that is considered "real property"
that you do not intend to include in the sale. Real property
is anything that is attached to the home. For example, you
may have a chandelier that has been in your family for generations
and you take it from home to home when you move. Since the
chandelier is attached to the house, it is considered "real
property" and a reasonable buyer would normally expect
it to go with the house. The listing contract should make
clear that it does not, and your agent should also enter this
information with the Multiple Listing Service.
Real Estate Commission
In most areas there is a "customary" percentage
that real estate agents and companies expect to earn as a
commission. The percentage varies from region to region,
and depending upon whether it is residential real estate
or commercial real estate. However, just like anything else
in real estate, this amount is negotiable. When completing
the listing agreement, you and your agent will agree on the
amount of the real estate commission.
The listing contract also specifies when the commission
is earned. This is important and you should pay close attention:
If a ready, willing and able buyer presents an offer that
meets your listing price and terms, the agent has effectively
earned the commission at that time. If a buyer presents an
offer and you reach agreement on price and terms through counter-offers,
the agent has also earned his or her commission.
Sellers occasionally get cold feet, just like buyers do. If
this is going to happen to you - make sure you consider it
before you agree to terms with a buyer.
Once you reach terms with a buyer, you have incurred two
contractual obligations. One is to the buyer and the other
is to your agent. if you should decide to cancel just because
you've changed your mind about moving -- the agent has earned
their commission according to the terms of most contracts.
They will probably want to be paid.
Multiple Listing Service
Your listing contract should specify whether or not the house
will be listed with the local MLS (multiple listing service).
It is definitely in your interest to have the house listed.
This is because your sales force is automatically multiplied
by however many agents are members of the local MLS. If your
house is not listed, then you only have one agent working
for you instead of many.
This is where selling "by owner" generally fails.
Owners see that an agent puts a sign in the yard, prepares
brochures, holds open houses, advertises in the paper and
on the internet, and they think this is how houses are sold.
It is easy to understand why owners believe that, but it just
isn't so.
Listing agents do those things for three main reasons. First,
because the owners expect them to. Second, because it shows
other sellers how much they do to market a home, and it gets
more listings. Third, because it brings in clients who want
to buy "some" house - though it probably will not
be yours.
Practically no one buys the house in the ad or a home they
visit during an open house. Think about your own experiences
when you bought the house you are now selling. How did you
find it? Probably through your agent, who found it in the
Multiple Listing Service.
The MLS is a huge network and practically every local agent
is a member -- and those agents have clients looking to buy
a home. That network is what sells your house.
Agency Duties of a Listing Agent
Many people think of the real estate agent as a salesperson.
Many agents (perhaps most agents) would jump at the chance
to be "just" a salesperson. But they aren't just
a salesperson. Most states have legislated it so that real
estate agents are also -- agents.
An agent is "responsible" to their clients. They
have a duty, called a "fiduciary duty." This means
the agent is responsible to act in the best interests of their
client. A car salesman does not have to act in your best interests
-- they just have to sell the car. It isn't that simple for
real estate agents.
Real estate agents not only have to sell the house, they
have to be responsible. That involves a lot of liability,
which is one reason for all the disclosures and the pages
and pages of contracts, and why they want to be paid for being
more than "just" a salesman.
The listing contract will specify that your agent is acting
as a "seller’s agent." This means that, in
the sale of your house, they are working for you and only
you -- and looking out for your best interests.
However, there may be times when your listing agent has
a client who wants to buy your home. For that reason, there
is a little "wiggle room" in the listing contract.
If your agent also represents the buyer, the listing contract
should specify that they provide an additional disclosure
that details whether they continue to act as your agent or
assume the duties of a dual agent.
The contract also provides permission for your listing agent
to act as an agent for others on other transactions. They
can continue to list other properties, and represent buyers
looking at other homes besides yours.
Lockbox
A lockbox is a basically a padlock with a cavity inside where
a key to your home can be placed. Only someone with a key
(electronic or mechanical) or the combination can get into
the lockbox and access the key to your home. Having a lockbox
available at your house makes it easy for other agents to
get access to your house.
Without the lockbox, agents representing buyers would have
to set appointments to meet you or your agent at the house
so they could gain access and view the home. This would be
inconvenient. Since almost every other house does have a lockbox
available, if you do not allow one most agents will simply
not show your property. You will miss out on lots of potential
buyers.
The listing contract specifies whether you allow a lockbox
or not. It is locked into place, usually on the front door
and cannot be removed. Only other agents can access the key
that is located within the lockbox.
Resolution of Disputes
There are times when you and your agent have a disagreement
that you cannot resolve by yourselves. Maybe the agent did
a poor job or misrepresented something. Maybe your agent was
really doing their job correctly, but you did not understand.
Perhaps the agent will have a dispute with you.
The listing contract specifies what methods will be used to
settle such disputes. You can choose to accept binding arbitration,
which is usually cheaper than hiring a lawyer and going to
court. Usually, matters that can be dealt with in a small
claims court are excluded from having to go to binding arbitration.
You are not required to sign or initial the binding arbitration
clause. This would leave you free to hire an attorney and
pursue disputes in civil court instead of binding arbitration.
However, we are not recommending one choice or the other.
That is your decision.
Tips brought to you by
Real Estate ABC's.
About Blaine Morris, Marin Properties
As a top-producing licensed REALTOR with
Frank Howard Allen in Greenbrae, California, Blaine Morris
specializes in Central and Southern Marin County. Always just
a phone call or email away, Blaine works seven days a week
for his clients, providing them with the utmost in fast and
efficient service and follow through. Whether you are searching
for the home of your dreams, or thinking of selling it, Blaine
can turn your dreams into reality! Behind Blaine is the strength
and stability of the Central Marin office of Frank Howard
Allen, the #1 office of the #1 Brokerage in Marin County.
Contact him today at 415.925.3279 or
click here.
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