Listing Agreement

Posted on by user

Listing Agreement: Definition, How It Works, and Types

Key takeaways
* A listing agreement is a contract in which a property owner (seller) hires a real estate broker (agent) to find a buyer and represent the seller’s interests.
* It is an employment contract, not a conveyance of property; no transfer of title occurs between seller and broker.
* Common listing types: open listing, exclusive agency, and exclusive right-to-sell.
* Most states require written listing agreements and they typically spell out price, duties, compensation, and termination terms.

What is a listing agreement?

A listing agreement authorizes a licensed real estate broker to market a property and act as the seller’s agent in locating a buyer under the seller’s terms. The seller pays the broker a commission if the broker procures a ready, willing, and able buyer according to the contract. Less commonly, “listing agreement” can also refer to a contract between a securities issuer and an exchange to list securities.

How a listing agreement works

The agreement sets the scope of the broker’s authority and the obligations of both parties. Typical elements include:
* Property description and any personal property to remain or be removed (appliances, window treatments, etc.).
* Listing price and sales terms.
* Broker duties (marketing, showing, negotiating) and seller duties (disclosures, access).
* Broker compensation and how commissions are earned and paid.
* Dispute-resolution terms (mediation/arbitration) and an automatic termination date.
* Any special conditions or contingencies.

Because brokerage is regulated, only a licensed broker may legally act as an agent to list, sell, or rent another person’s real estate. Most listing agreements must be in writing.

Types of listing agreements

  1. Open listing
  2. Nonexclusive. The seller may employ multiple brokers and can sell independently.

  3. Only the broker who actually finds the buyer is owed a commission.

  4. Exclusive agency listing

  5. One broker is the exclusive agent, but the seller retains the right to sell the property personally without paying a commission.

  6. The broker is paid if they are the procuring cause of the sale.

  7. Exclusive right-to-sell listing

  8. Most common. One broker has exclusive authorization to sell and is paid a commission regardless of who procures the buyer while the agreement is in effect.

Multiple Listing Service (MLS)

The MLS is a shared database used by cooperating brokers to list properties and share information and commissions. Listing a property on the MLS expands exposure and facilitates cooperation between listing and selling brokers.

Ending a listing agreement

Although binding, a listing agreement can end before its scheduled expiration in certain circumstances, such as:
* Broker fails to market the property or otherwise breaches duties.
* Property is destroyed (fire, natural disaster).
* Death, bankruptcy, or incapacity of the broker or seller.
Specific termination rights and procedures will be defined in the agreement and may vary by jurisdiction.

Practical tips

  • Read the agreement carefully for fees, duration, and exclusivity clauses.
  • Clarify which services the commission covers (marketing, staging, photography).
  • If uncertain, consult a real estate attorney or your state’s real estate regulator for guidance.

Conclusion

A listing agreement defines the working relationship between a seller and a broker and determines how the broker is compensated. Choosing the appropriate type and understanding the contract terms helps protect the seller’s interests and sets expectations for the sale process.