Seller Listing Agreement
Once you have decided that you want to work with a realtor, you will need to sign a listing agreement. These agreements provide your real estate broker with assurance that you will pay them if they help you sell the house. It also reassures the buyer's real estake agent that they will get paid their commission as well, as the buyer's realtor will split the commission with your realtor. Once these realtors know that they will get paid if a sale is made, you can be confident that they are both working for you.
The seller listing agreement is a binding contract that provides your agent with an exclusive right to complete the sale of your house for a period of time, and an agreed upon commission percentage once the house is sold. Commissions range between 5% and 7%, with the most common commission level being 6%. Brokers will ask for 7% if the dollar value of the sale is small, or if it looks like the sale may be difficult. Some brokers will settle for 5% in the right market conditions.
Seller listing agreements usually provide the listing broker with exclusivity. This is required because they will undetake the expense of getting your property listed in the multiple listing system (MLS), and other advertising expenses, in addition to their time and effort in trying to sell your house. If you can, keep the period of the exclusive down to a few months, as this allows you to motivate the real estate agent to get things done quickly. Even if your house does not sell during that time, amd you are happy with their effort, you can always extend the contract. Having that be at your option, however, could be very important.
The seller listing agreement typically includes a commitment by your real estate agent to get your property listed in the MLS. Make sure that this is a part of your contract. The MLS provides information on your house to the entire network of realtors, and therefore puts your house in front of the most potential buyers.
Most likely, you will also be agreeing to a lockbox arrangement. A lockbox is a secure box placed near the front of your property that will hold a key to your house. Real estate agents will use the key in the lockbox to show your house to potential buyers without requiring you to adapt your schedule to be available for each showing. The lockbox can only be opened by a key that your realtor has in their possession, or using a combination that your realtor knows. A lockbox makes it much easier for many buyers to be brought in to look at your home. Before the lockbox is setup, be sure that your valuables are secure before agreeing to a lockbox arrangement. For example, you should not have jewelry laying about with strangers walking through your house. While the great majority of people are honest, there is no reason to tempt people.
A seller listing agreement is critical to motivating realtors to promote, show, and sell your house. It also provides mechanisms to promote your property and to make it easier to show to prospective buyers. As always, read the agreement carefully, and make sure you understand it. It also helps to know that you are looking at a standard agreement used by your realtor with all of their customers.