Three Clauses You Should Definitely Use to Amend Your Listing Agreement

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.

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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 All of the terms of the Listing Agreement will take effect unless they are superseded by amending clauses.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.

 

 

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

OMG! I Just Found Two Ethical Real Estate Agents

As circumstances would have it, I am in the processing of interviewing real estate agents to list my home.

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Now, most home sellers do not bother interviewing agents—they just choose the first one they speak with. The few that do interview agents tend to do it in person, usually at their home. Not wanting to do things as everyone else, I have taken a different approach. I made up a survey and emailed it to agents in my neighborhood (over 80 of them). Among other things on the survey is a series of probing questions to see what kind of real estate agent they are. (To see a list of over 30 questions you can use to interview listing agents, click here.)

One of the questions I included in the survey was meant to discover if they are truly an ethical agent. Here is that question:

Is there a chance you will represent the buyer when selling my home?

This is probably the single most important question you can ask a listing agent during an interview, because it tells you everything you need to know about how ethical they are.

Representing both the buyer and seller in a real estate transaction is called Dual Agency. The consumer advocate group CAARE calls dual agency “The Biggest Consumer Scam in Real Estate.” It is so bad, dual agency is illegal in every other profession. Only in the real estate industry could a practice so unethical, actually be legal. Would you want your lawyer also representing the other side in a lawsuit?

Needless to say I was disappointed when 100% of the agents who responded to my survey answered this question “yes.” I would like to think those answers say more about the industry than the agents. Can it be that 100% of real estate agents are unethical? I was beginning to think so.

Just as I was about to give up on the whole lot of them, I came across an (old) article by a real estate agent from Seattle named Patrick Flynn where he discussed the merits of dual agency. Patrick, a true hero in the real estate industry, actually proclaims, in writing, that dual agency is intolerable, a no-win scenario and should be avoided at all costs. Thank you Patrick.

Not to be outdone, Jay Thompson, a real estate broker in Phoenix, echoed the same sentiments as Patrick when he said, regarding dual agency, “just because something is legal doesn’t make it right or what is best for all parties involved.” Kudos to you Jay.

As long as this highly unethical and objectionable practice remains legal in real estate, it is incumbent upon the seller (and the buyer) to forbid their agent from acting as a dual agent, because you can be sure, left to their own devices, most agents will gladly forfeit their fiduciary duty at a chance of collecting double commission. Show me the money. Oh the hypocrisy.

To see how ReaListing puts and end to the hypocrisy, click here.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.