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Tips For Understanding The Listing Contract When Putting Your Home Up For Sale

Tips For Understanding The Listing Contract When Putting Your Home Up For Sale

Tips For Understanding The Listing Contract When Putting Your Home Up For Sale

When working with a real estate agent for listing a home for sale (or even commercial real estate) the agent will present the owner with a listing agreement.  The listing contract provides the terms and conditions the real estate agent will use to list the home for sale on the local MLS (Multiple Listing Service) where all homes are listed by agents.  Understanding the listing contract is important for homeowners since the contract will contain the rights each party has in the transaction.  This article looks at some of the important areas homeowners need to be paying attention to in the listing contract.

Basic Terms of the Listing Contract

Some of the important basic terms of the contract relate to things like making sure the correct address shown, understanding how long is the listing agreement for, and is the agreed upon commission rate correctly captured in the contract?  Typos happen and while not a huge deal if the house is listed as 1234 Main Street when it should be 1233 Main Street, a commission rate of 8 percent when 5 percent was agreed upon could become a costly error if the contract is ever enforced in court.  Just as with any contract everyone signing the contract should be reading the language and making sure they understand what they are signing.  If there are questions, ask your real estate agent or get an attorney involved if there is some language in the contract that is not understood.

The listing contract is in fact a contract between the homeowner and the broker of the real estate company.  While the real estate agent will be the day-to-day person working with the homeowner to get their home sold the agent’s authority to do so comes from their broker.  Brokers often times set the overall policy as to what minimums the contract needs to have.  For instance is the listing agreement length six months or some other number?  What is the commission rate?  Depending on the broker some of the terms in the contract cannot be changed by the real estate agent without the permission of their broker.  On the other hand, there are brokers who give their agents full discretion as to what they can offer so long as it is legal.

What Are The Requirements For the Homeowner and Real Estate Agent

The listing contract sets out the duties each party is responsible for.  For instance, the real estate agent may be placing a sign on the property, putting a lockbox on the home, taking photos/videos, advertising the property on the MLS and social media and more.  The homeowner is agreeing to let the agent do all the above as well as making sure the home is kept in good working order, properly prepared for pictures, etc.  The homeowner needs to understand what is required of them as part of the listing contract.  Failure by any of the parties of the contract to do what is required of them can lead to lawsuits.

Sometimes things are not specifically mentioned in the listing agreement but are instead understood based on what the agent told you.  Will the agent be taking pictures with their cell phone or hiring a professional photographer?  Some agents keep their own high-definition cameras and know how to agent with listing agreementtake great pictures.  What is the agent saying with regards to that?  Homeowners should make sure their home is shown in the best possible light as possible and that means professional level camera gear.  Other things like open houses may not be specified on the contract.  Open houses are generally a thing of the past since most buyers are starting their search online and the photos are what draw them in.  Open houses these days are more a tool for agents to meet more buyers to represent as potential clients.

If a home is owned by a married couple, then both spouses need to be signing off on the listing agreement.  This can become a problem in the situation where the spouses are separated and/or in the process of divorcing and both of them are not on the same page when it comes to the decision to sell their house.  Not only should both spouses be signing on the listing agreement, both will be required to sign the closing paperwork in order to officially sell them home.  If the homeowners can’t agree on the sale then attorneys will have to get involved to help settle the dispute.

Beware of Free Money Offers For You In Exchange For Being Your Exclusive Listing Agent

There are certain real estate companies calling up homeowners and offering them “free money” for the purpose of getting the homeowner to sign a contract that requires the homeowner to only sell their home using the real estate company offering the money.  In reality the money is not really free as the homeowner is giving up their right to list their home for sale with any other company than the one they took the money from.  If the homeowner wants to use that company and is fine with their listing agreement terms then getting some extra money for that purpose may not be a bad deal.

On the other hand, these companies are requiring that the homeowner commit to using them to sell their homes at anytime during the next forty years.  If they never sell their home then they get to keep the money.  If they do sell their home with another real estate company the company who gave them the money can sue them for the commission they would have been paid if they listed the home for sale.  So the homeowner may find themselves paying quite a bit more for the sale of their home if broken chainthey don’t use the company who had them sign the agreement or even if they forget they were required to use that company.

Unfortunately, the terms of these contracts are being upheld in court as the language is legal.  So homeowners need to be aware if anyone comes offering money in exchange for promising to only list their home for sale with a particular company they could be stuck long term with just having to use that company to list their home for sale.  When in doubt about the terms of the contract someone is wanting you to sign have an attorney look at the document to provide advice.

Final Thoughts

Homeowners need to read through the listing agreement to make sure it reflects the terms they agreed to.  When questions arise the homeowner needs to ask their agent and attorney for clarification.  Beware of offers of "free money" as when free money is involved there are always strings attached.

Additional Resources

  • Affordable Home Staging Tips - As part of the preparation process for getting a home ready for sale home staging should be considered.  This article provides some wallet smart tips to stage a home and make it look great.
  • Home Selling Checklist - Great tips for homeowners to get their home ready for sale.
  • What Does Under Agreement Imply - Under contract is a term used when real estate is being bought or sold.  This article looks how under contract is used when transacting in real estate.

About the author: The above article “Tips For Understanding The Listing Contract When Putting Your Home Up For Sale” was provided by Luxury Real Estate Specialist Paul Sian. Paul can be reached at or by phone at 513-560-8002. If you’re thinking of selling or buying your investment or commercial business property I would love to share my marketing knowledge and expertise to help you.  Contact me today!

I work in the following Greater Cincinnati, OH and Northern KY areas: Alexandria, Amberly, Amelia, Anderson Township, Cincinnati, Batavia, Blue Ash, Covington, Edgewood, Florence, Fort Mitchell, Fort Thomas, Hebron, Hyde Park, Indian Hill, Kenwood, Madeira, Mariemont, Milford, Montgomery, Mt. Washington, Newport, Newtown, Norwood, Taylor Mill, Terrace Park, Union Township, and Villa Hills.

Tips For Understanding The Listing Contract When Putting Your Home Up For Sale


#1 By Gabe Sanders at 4/2/2022 9:23 AM

This is valuable information for sellers. They should read the listing agreement carefully and ask questions on those parts that they don't fully understand.

#2 By Paul at 4/2/2022 -2:30 PM

Thanks Gabe!

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