How to Decide on a Listing Agreement When Selling a Home

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By eHow Contributing Writer

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If you sell your home through an agent, you'll need to sign a listing agreement, which spells out the terms of the agent's responsibilities and commission. The three primary types of listing agreements are Open, Exclusive Agency and Exclusive Right to Sell. Here's how you can evaluate the three types.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

Listing Agreements
Real Estate Agents

Step 1

Know that the most common agreement is Exclusive Right to Sell. Here the listing agent is entitled to a commission no matter who sells the property - including you. If another agent brings a buyer, you still only owe a commission to your agent, who will split it with the agent who brought the buyer.
Step 2

Understand that in Exclusive Agency, you don't pay a commission to the agent if you find a buyer (basically, you're competing with your agent). You might want to use this kind of agreement if you already have a good prospect or two before you list your house.
Step 3

Realize that in an Open agreement, you agree to pay a commission to any agent as long as that agent is the first to produce an acceptable buyer. You will not owe a commission if you find a buyer.
Step 4

Choose a listing agreement and decide on an expiration date. The average expiration date is usually 90 to 120 days after the signing.

Tips & Warnings

Keep in mind that you can change any standard agreement to suit your needs.
Especially remember to include an expiration date on all Open agreements - you can't enter into an Exclusive agreement while an Open agreement is in force.
Agree upon the amount of commission to be paid before you sign the agreement.
Be sure you're comfortable with the listing agreement you choose because it's legally binding once you sign.
If your employer has guaranteed to buy your home at a discount if you can't sell it, be sure to amend the Exclusive Right to Sell agreement to prevent an agent from getting a commission on your company's purchase.