Real Estate Agent Listing Agreements – Know what’s in them.
Hey, If someone tells you don’t need to have a contract reviewed, it’s a bad sign!
Should you have your real estate listing agreement reviewed by an attorney?
The short answer is yes. And I think the great real estate agents we work with would agree with me. Why?
Because quality agents want you to be comfortable. And to know exactly what you are signing. They want you to trust them.
If someone is discouraging you from having their contract reviewed, that’s a bad sign, right?
The listing agreement is a contract prepared by attorneys. And by and large, it’s purpose is to protect the real estate brokerage company. It’s not there to benefit you as the client.
So whether you are a buyer or a seller, before you sign that multi-page document, you should know what’s in it, and what it means for your relationship with your agent, and the company the agent may work for. And not only that, but you might even want to strike some terms in that agreement which aren’t in your favor.
What’s in the listing agreement, anyway?
What are some points to look out for in the agreement?
Well, one is the term “exclusive.” “Exclusive,” in this context, generally means that for the term of the agreement, you are working only with this particular agent. And not only that, but if you sell your property during the term of the agreement, you will owe a commission to that agent. Even if you yourself found the buyer. For example, if you end up selling to a friend, or a neighbor, or a family member, you often will still owe your agent a commission. That’s the way many of these agreements read.
You should pay attention to the term of the agreement. Is it 6 months? 12 months? Are you comfortable being tied to this agent and this brokerage for the length of time specified?
Is there an out clause (Termination clause)? If not, there should be. Because if you have a falling out with your agent, you’ve got to have a way to end the relationship.
How much are you paying in commission, and how is the commission calculated? Wait a minute, maybe I should have listed this one first! One important detail that is often overlooked, is commission calculated on the gross sales price, or the net sales price? For example, let’s say you are selling your property for $200,000 with a $15,000 closing cost credit. Your Gross price is $200,000, but your net price is only $185,000. Based on a standard 6% commission, you pay $900 more with the gross vs. the net. Not a trivial difference by any means.
So, I could go on and on, but this post is already getting long.
We’ve got you.
At O’Keefe, Rivera & Berk, we’re happy to take a look at your listing agreement and give you our opinion on it. We do this as part of our free consultation. And this is part of the overall theme that I’ve been preaching – get us involved in your transaction early enough for us to have an impact. If you wait until you have a contract in place, we won’t be able to help quite as much as we want to.