Listing agreements are arrangements between real estate agents and sellers. It entitles the real estate agent to advertise, sell, and list the seller’s property. Understanding every aspect of the agreement is essential, as both parties are bound by it.
But while a sales agreement favors the agent as it allows him or her to negotiate with the seller for a certain duration, it protects the seller as well by defining the agent’s responsibilities and the things that can be done in case the agent fails to fulfill them.
Relevant Terms Related to Real Estate Agent Transactions
If you’re ready to enter into an agreement with a real estate agent, here is a list of the most common terms that you’ll encounter. Understanding these terms makes the transaction easier and smoother for both parties.
Commission pertains to the amount that the seller pays the agent. It is usually 6% of the net sale amount. Some real estate agents charge no other fees other than their commission rate, which is an advantage to property sellers.
2. Exclusive rights to sell
Working with a real estate agent means you are giving the latter the right to sell your home or property as stated on the contract. There are different forms of agreements available to the agent, but this is any real estate agent’s premier choice.
The listing period is usually three to six months, but it may last for any specified period of time. From a seller’s point of view, shorter listing agreements are better. That way, if you don’t like the services of the agent, you can pick a different one. If, on the other hand, you’re happy, then extending the contract will be easy.
From the point of view of real estate agents, longer listing agreements are better because they can perform all the work necessary to make the property ready for sale and will not risk losing commissions when the house starts to gain real value.
4. Protection or safety clause
Although contracts have expiry dates, the clause would probably also apply to the broker or agent after such a date. It keeps you from avoiding paying the agent his or her fees by looking for a buyer while you are represented by an agent while waiting for the deal to be made before your agreement expires. But if you break the contract when you decide to alter the listing agent, you’re going to want an exception. If the agent sells the property quickly and the arrangement requires the first real estate agent to cut, you may have to pay two commissions.
The real estate selling agreement should specify the activities to be carried out by the agent on the seller’s behalf. Read this list carefully to ensure that you understand all that you have to know about it. If an agent requires specific tasks, such as listing your property on a certain platform, posting a sign on the yard, or making a listing folder, then they should be duly specified.
These are just some of the things that you must understand when dealing with real estate agents. Again, you must work only with individuals who are genuinely concerned and duly protect your best interests.