The Listing Contract
Also referred to as a listing agreement, the listing contract gives a licensed real estate professional authorization to act on your behalf in the sale of your home. Listing contracts come in all shapes and sizes, but there are characteristics which are common to all. Among the elements of any valid listing contract are:
Writing - All real estate contracts must be in writing.
Employment - The listing contract is a personal services contract between you and the broker. It contains all of the terms and conditions of employing the broker and authorizing the broker to represent you in marketing and selling your home.
Compensation - For any contract to be valid, there has to be compensation. The listing contract will specify the amount and timing of payment to your broker. Typically, payment is an agreed upon percentage of the sales price, payable at closing. It is important to note that your obligation to pay your broker may not absolutely depend on a finalized sales transaction. For example, if the broker finds a bona-fide buyer who is willing to pay your asking price and agree to the terms you have offered, but you get cold feet at the last moment and decide not to sell, the broker has done his job and is entitled to be paid under the terms of the listing contract.
Title - All listing contracts will ask who has title to the property. Property can't be sold unless everyone who holds title interest in the property is part of the sale.
Termination date - You shouldn't sign any listing contract without a specific termination date. The most common duration is 180 days. If the contract has an indefinite duration such as until sold, or no duration specified at all, don't sign it. The listing contract is a legally binding document and you don't want to get locked into one with no clearly defined termination date. If the contract expires before your home sells and you still want to keep using the same broker, you can simply sign a new contract.
There can be and often are other elements to a listing contract. As with any legal document, you should read the listing contract carefully and be sure you understand exactly what you are agreeing to before signing. If you have any questions about your listing contract it would be wise to consult a lawyer for clarification.