If you are thinking of selling your house through a real estate agent, a Real Estate Listing Agreement will be one of the first documents you sign. A listing agreement is a legally binding contract that identifies the extent of the roles and and responsibilities between you and the agent.

Although a Real Estate listing Agreement can vary from place to place, a common practice among listing agents to use boilerplate, industry standard forms. No matter which agreement you decide to sign, read it carefully or consider hiring a legal representative if you need to. Remember everything on a Real Estate Listing Agreement is negotiable.

Common Real Estate Listing Agreements

There are three common listing agreements or contracts, and the one you sign will determine the level of service, rights and responsibilities that both you and your agent will agree to over a set period of time.

Exclusive Right to Sell Listing Agreement - The Exclusive Right to Sell Agreement is the most common listing contract. The agreement gives the selling agent an exclusive right to list and sell your home for a set period of time. The commission you pay the agency will come at the time of closing and is usually take out of the proceeds from the sale.

• The agreement applies even if you find the buyer yourself.
• In the event that an agency other than the listing agency sells the home, the listing agency typically splits its total commission with the second agency.

Exclusive Agency Agreement - Almost identical to the Exclusive Right to Sell Agreement, the Exclusive Agency agreement allows the seller to retain the right to sell the property without paying a commission if the buyer was not introduced to the property by the agency.

In the event that an agency other than the listing agency sells the home, the listing agency typically splits its total commission with the second agency.

Open Listing Agreement - An open listing agreement gives no single agency exclusive right to sell the property. The seller can sell it himself without paying a commission to anyone and can he can sign the agreement with more than one agency.

If the seller does pay a commission, it's to the selling agency only. No commissions would be shared in an Open Listing scenario.

Common Terms to Consider in Listing Agreements

Term of the Agreement - The term of the agreement sets the amount of time that your agent will represent you and market your home. The longer the agreement generally benefits the agent because it provides more time to find a buyer for your house. In a weak market that may be okay, but in a sellers market, you may not want to commit your self to one agent for an extended period of time. but if homes are selling quickly, you don't want to be committed to one agent for more than a few month. Consider how long home in your area are typically on the market before they close when considering how long to lock yourself into a listing agreement. If the house doesnt sell with the agreed time, you can always extend the period of time if you are satisfied youre your real estate agents work to date.

Commission - Commissions are negotiable. The industry standard is usually between 5% to 7%. Some real estate agents or agencies have policies not to negotiate significant reductions in their commission schedules. When interviewing agents compare what services each offers and compare what commissions schedules the agent is willing to work on. A higher commission rate doesnt always mean that the agent will market you house more aggressively or more effectively than a discount commission broker. As the commission rate can save you thousands or tens of thousand of dollars, understand what services your will receive for the amount of money you will pay at closing. Buyers agent can find out how much commission is offered on your home through the multiple listing service (MLS).

Multiple Listing Service (MLS) - A listing agreement commonly authorizes your agent to post your home in the MLS. There are few reasons why you wouldnt want you home posted to the MLS as it is the single best way for other agents and buyers to find your home. Most MLS listings are picked up by Internet real estate directories that can be searched by consumers.

Regional MLS systems often overlap into popular neighborhood. Understand which MLS systems your agent will list your home and what timeframe it will be listed. Also check to make sure the MLS systems where your home will be listed will also be picked up by the popular Internet search engines. The public does not have access to all the all the data that agents and brokers can access.

Which Agreement Is Best for You? Most agencies offer only the Exclusive Right to Sell agreement. Before getting paid themselves, a good real estate agent spends a great deal of time and money marketing and closing their listings. The Exclusive Right to Sell agreement protects the real estate listing agents investment when marketing houses. Signing an Exclusive Agency agreement can be tricky because it leaves you the option of selling the house yourself.

In reality, the seller rarely finds the buyer herself. But when it does happen, there is the problem of which party gets the credit. Did the buyer become aware of the house because of the sign out front or an ad on the Internet? Signing an Exclusive Right to Sell solves this problem.

An Open Listing agreement will allow you to sign with many different agencies, but there is little motivation on the part of a listing agent to market the house since a commission is only paid to the selling agent.