Listing Agreement: What Every Seller Needs to Know

A listing agreement is one of the first and most important documents you’ll encounter when selling your home. It’s a legally binding contract between the property owner (seller) and a real estate broker (and their agent) that authorizes them to market and sell your property.

For sellers, understanding the terms of a real estate listing agreement is essential. It not only sets the expectations for how the property will be marketed and sold but also provides legal protection if disagreements arise. So whether you are selling your family home in Fayetteville, AR, or your vacation house in Miami, FL, keep reading to dive deeper into what a listing agreement is, the different types available, and the most important considerations before signing one.

What is a listing agreement?

A listing agreement is a contract between a homeowner and a real estate broker that authorizes the broker, and by extension their agent, to market and sell the property. Often referred to as a seller broker agreement or seller agent contract, this document outlines the terms of representation, commission fees, and the duration of the relationship. Without a signed listing agreement, a real estate agent does not have the authority to represent the seller in a transaction.

Key aspects of a listing agreement

While details may vary by broker and state regulations, most listing agreements include the following essential components:

Authorization to sell

At its core, the listing agreement gives the broker the authority to act on the seller’s behalf. This may take the form of an exclusive right to sell listing agreement, where the agent is guaranteed a commission if the property sells during the contract period, or a less restrictive form, such as an exclusive agency listing agreement.

Terms of representation

The document specifies what type of services the agent will provide. This includes preparing and marketing the property, hosting showings and open houses, and negotiating offers. It sets the expectation for how actively the agent will represent the seller.

Commission structure

One of the most scrutinized elements of a seller agent contract is the commission agreement. Typically expressed as a percentage of the final sale price, this fee is paid once the property is successfully sold. Some agreements may also address how the commission is split between the listing broker and the buyer’s agent.

Duration of the agreement

The contract will specify the start and end dates of the representation. Common durations range from 90 to 180 days, though this can be negotiated. Sellers should carefully review this term to ensure they are comfortable with the length of the commitment.

Seller and agent responsibilities

The listing agreement clearly outlines the obligations of both parties. The seller must provide accurate property disclosures, maintain the property in show-ready condition, and allow reasonable access for showings. The agent is expected to market the property, communicate with buyers and their agents, and guide the seller through negotiations and closing.

Property description

Most agreements include a detailed description of the property being sold. This includes not only the address and size but also any fixtures, appliances, or personal property that will be included in the sale.

Dual agency provisions

In some states, listing agreements may address the possibility of dual agency, where the same agent represents both the buyer and the seller. This arrangement is controversial because it raises questions about loyalty and fiduciary duty, but it is legal in certain jurisdictions if disclosed and agreed to by both parties.

Additional terms

Beyond the basics, a real estate listing agreement may also cover the listing price, specific marketing strategies to be used, and clauses for early termination. It may include provisions for a protection period, during which the agent may still be entitled to a commission even if the property sells after the agreement expires, and dispute resolution clauses such as mediation or arbitration.

Importance of a listing agreement

A listing agreement isn’t just paperwork; it’s a critical part of ensuring a smooth, professional, and legally compliant sale, which promotes:

• Legal protection: By clearly defining the relationship between seller and agent, the agreement protects both parties from misunderstandings and potential disputes.
• Transparency: It lays out the terms in writing, ensuring that there is no ambiguity about responsibilities, commissions, or timelines.
• Smooth transactions: With expectations clearly stated, the listing agreement helps streamline the selling process, reducing the likelihood of conflict and making it easier to focus on attracting buyers and closing the sale.

Different types of listing agreements

Not all listing agreements are created equal. Sellers should be aware of the different types available and how each one affects their rights and obligations.

Exclusive right-to-sell listing agreement: This is the most common type of exclusive right-of-sale listing agreement. Under this arrangement, the broker earns a commission regardless of who brings the buyer — whether it’s the agent, another agent, or even the seller themselves.

Exclusive agency listing agreement: This form gives the broker exclusive rights to market the property, but it allows the seller to avoid paying a commission if they find a buyer independently.

Open listing: With this option, a seller can work with multiple agents simultaneously, and only the agent who secures the buyer is entitled to the commission. While flexible, this approach often results in less commitment from agents.

Non-exclusive listing agreement: This type is similar to an open listing but formalizes the right for multiple agents to work on the property at once, with only the successful agent earning a commission.

Net listing: In a net listing, the seller sets a minimum acceptable price, and the agent keeps any amount above that as their commission. While still legal in some states such as Texas, this practice is considered controversial and is prohibited in many states because it can create conflicts of interest.

Key considerations of listing agreements

Before you sign a seller broker agreement, keep these points in mind:

• Negotiate the terms: Review commission percentages, length of agreement, and termination clauses.

• Understand protection periods: Some agreements allow an agent to claim a commission even after the contract expires if the buyer was introduced during the agreement.

• Seek professional advice: Consider consulting a real estate attorney to ensure the contract meets your needs.

Also remember: Offers of compensation are not mandatory. You decide whether to offer compensation to a buyer’s agent. Realtors can guide you through market trends and strategies so you make the best choice for your situation.

5 things to check before signing a listing agreement

The entire listing agreement is important, but you can double-check five crucial details in a handful of seconds:

• The listing price
• The agreement’s expiration date
• The commission rate and how it’s divided with the buyer’s agent
• The type of listing agreement
• Your personal property that is or isn’t included in the transaction

These details are easy to verify, but they aren’t the only things you should look for in your listing agreement. Try to read it as many times as you need to completely understand what’s in it.

FAQs about listing agreements

What happens when the listing agreement expires?
When a listing agreement ends, the seller is free to either sign a new agreement with the same agent, choose a different agent, or sell independently.

Can you terminate a listing agreement?
In many cases, yes. Most agreements contain termination clauses, though the seller may need to provide written notice. In some cases, brokers may require payment for marketing expenses. 

Can I negotiate a listing agreement?

You can negotiate several parts of a listing agreement. These include: Agent commission, agent duties, list price, agreement duration, and listing type. Most minor changes can be made right on the contract, but bigger changes might need to be added to an addendum at the end of the agreement.

How much does a listing agreement cost?

It usually doesn’t cost anything to sign the listing agreement itself. You probably won’t pay anything upfront, but the contract will specify the broker or agent’s commission fee. This fee is paid at closing once the title company confirms a clear title and the property is formally signed over to the buyer.

What if my home doesn’t sell?

If your home doesn’t sell within the time frame outlined in the listing agreement, you have two options: Renew the agreement and keep your current agent or hire a different agent. If you choose to find a new agent, review the termination section of the agreement to make sure you won’t owe any fees for the expenses incurred during the listing period.

Can I make changes to the listing agreement after I sign it?

Yes, but only if all parties agree. Most modifications to a listing agreement are done in writing, either directly on the agreement itself or through a listing agreement addendum (more information added to the end of the document).

Redfin does not provide legal advice. This article is for informational purposes only and is not a substitute for professional advice from a licensed attorney.

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