This is the first in a series on the Realtor listing agreements, both commercial and residential.
The relationship between a Realtor and his principal is typically defined by a written agreement. In Kentucky, the courts require that the agreement be in writing to satisfy the statute of frauds. Not so in Ohio. And that writing then determines the rights and responsibilities of the parties to that agreement.
There are, of course, agreements that define the relationship between a buyer and his Realtor. These “Buyer Broker Agreements” are addressed in another blog entry.
And as to agreements between a seller and his Realtor, what is referred to as a “Listing Agreement,” there are two basic types: (i) Exclusive Right to Sell and (ii) Exclusive Agency. These sound similar, so what is in fact the difference?
Very simply the distinction is whether a commission is due and owing when the seller finds his own buyer, independent of the efforts of the Realtor. Under an “Exclusive right to sell” agreement, a commission still is due in such instance. In an “Exclusive agency agreement” a commission wouldn’t be due.
The exact language and obligations between the parties is not, of course, just in the title to the document, but in the body of the text, so a simple distinction between “Exclusive Right to Sell” and “Exclusive agency” agreements may not lie in the caption of the document. As with all contracts, one must read the entire document to know what it says.
Now, because almost all listing agreements are signed on a Realtor-drated form, as you might imagine, they are almost all Exclusive Right to Sell Agreements. The Realtor wants to get paid if he is going to spend time and money on generating buyers for your home, even if the luck of the draw would ultimately yield that buyer from the seller’s own efforts.
For this reason, most Realtors would refuse to enter into a listing agreement on broad “Exclusive agency” terms, but they might be willing to except out from the agreement certain buyers who have expressed an interest or that the seller wants to approach before committing to his Realtor.
Understanding the basic framework of listing agreements is important before signing.