The listing agreement is a binding contract between you and a brokerage. It sets out what they will do, how long they have to do it, and what you owe them. Most sellers sign it quickly because the interesting conversation — about price and marketing — happens before the paperwork appears. It is worth slowing down for.
The Three Main Types
Exclusive right to sell. The most common by far. The brokerage earns its commission when the home sells during the listing period, no matter who finds the buyer — including you. In exchange you get the fullest marketing effort, because the firm knows it will be paid for the work.
Exclusive agency. One brokerage represents you, but if you find the buyer entirely yourself you owe no commission. It sounds better for the seller and often works less well in practice, since the firm is investing in marketing that you might undercut, and may invest accordingly.
Open listing. You may engage several brokerages, and only the one that produces the buyer is paid. Rare in residential sales, and it usually attracts little committed effort from anybody.
The Terms to Read Before Signing
- Compensation. The rate and how it is calculated. It is negotiable. Since August 2024 any contribution toward a buyer’s agent is negotiated separately rather than advertised on the MLS — see how real estate agent commissions work.
- Listing period. How long the agreement runs. A shorter initial term with the option to extend is a reasonable request if you have not worked with the firm before.
- The protection period. The clause that catches sellers out. It says that if you sell after the listing ends to someone the brokerage introduced during it, you still owe the commission. This is legitimate — it stops a buyer and seller waiting out the agreement to avoid paying — but check its length and insist the firm provide a written list of protected buyers when the listing ends.
- Exceptions. If a specific person was already negotiating with you before you listed, name them as an exclusion in writing, or you may owe a commission on a buyer the brokerage had nothing to do with.
- Services promised. Photography, MLS entry, marketing, open houses, showings, and reporting. Get specifics rather than “full service,” particularly with a discounted rate.
- Cancellation. How you end the agreement if it is not working, whether any cancellation fee applies, and who owes what for marketing already done. Ask before signing, not when you are unhappy.
- Dual agency. Whether the firm may represent a buyer as well, and what happens if it does.
- Lockbox, sign and showing arrangements, and how much notice you get before a viewing.
A Few Practical Points
Every term in a listing agreement is negotiable, including the ones on a pre-printed form. If something in it worries you, say so before signing; afterwards you are asking a favor rather than agreeing a term.
Be wary of committing to an unusually long listing period with a firm you have not worked with, and of a very high suggested price paired with a long term — that combination can leave you locked in while the listing goes stale. See how to choose a real estate agent.
Finally, keep a copy, and diary the end date and the length of the protection period. Both matter later, and neither is memorable at the time.
