When it comes time to sell your home through a real estate agent, the document that cements the relationship is called a Listing Agreement (or Listing Contract). I assure you there are two aspects to the Listing Agreement few home sellers know about.
First, the Listing Agreement is not a government sanctioned form. It is a form typically created by the state’s Association of Realtors. It is created by realtors, for realtors—not consumers. It lays out the terms of the contract between the broker and the home seller, and its primary thrust is to make sure the agent/broker gets paid (and doesn’t get sued). Consequently, the default terms of the Listing Agreement tend to be very favorable toward the agent/broker, which is to be expected.
The second thing most home sellers do not know about the Listing Agreement is that it can be amended by the seller. All of the terms of the Listing Agreement will take effect unless they are superseded by amending clauses. As a home seller, you do not have to accept the terms as stated on the Listing Agreement. You can amend the agreement with terms that are more favorable to you. All Listing Agreements have a section called “Additional Terms,” or something similar. All you have to do is add the amending clauses to that section and get the agent/broker to agree to them. What if they do not agree to your amending clauses? You can back down, or you can do what I would do: find another agent. As things turn out, there are lots of them.
So, what clauses should you use to amend the Listing Agreement? There are many you might consider, but the three detailed here are a must for any intelligent home seller. (Special thanks goes to CAARE, the Consumer Advocates in American Real Estate for suggesting some of these clauses. Visit their web site for suggestions on other amending clauses.)
The first clause you should use makes sure all the other clauses take precedent over the Listing Agreement.
1. The following clauses take precedence and supersede any conflicting terms that exist in the Listing Agreement.
The second clause ensures that there is no chance of dual agency. This is an absolute must if you want the best, most committed representation from you listing agent. Of course, this is only required in states where dual agency is legal.
2. The broker/agent will not engage in a dual agency relationship in which the broker represents both the buyer and seller when selling the seller’s home. If a multiple representation situation arises, the agent/broker will refer the buyer to another broker.
The way most Listing Agreements work, is that the commission you agree to pay goes 100% to your listing agent and THEY agree to pay a portion of that (typically 50%) to the buyer’s agent. In the event that they are not required to compensate a buyer’s agent, they get to keep 100% of the commission, unless you add the following clause:
3. In the event the broker/agent is not required to compensate a buyer’s broker, the funds earmarked for the buyer’s broker shall be refunded to the seller.
These three amending clauses should be included on any Listing Agreement you use to sell a home through a realtor. They may not even come into play, but in the event that they do, you know you are protected. You will know that the equity in your home which is rightfully yours is yours, and that your real estate agent is truly committed to your success and no on else’s.
To find more helpful information to protect your hard-earned equity when selling your home, visit ReaListing.