Although it is possible to sell your house without using the services of a real estate agent, the great majority of house sales generally involve the services of one of more agents.
The initial arrangement between the seller and the broker or agent must be carefully worked out, and a listing agreement in writing should be entered into between the seller and the agent before the agent begins to advertise and show the property. A listing agreement is a contractual obligation and it is important for the seller to understand the type of listing he or she is giving the agent.
There are a number of listing agreements:
Open listing: The seller gives the real estate agent the right to sell the house but the seller reserves the right to sell the house himself and to employ other agents as well. If the seller is able to sell the house without the assistance of the agent, no commission is earned. The first real estate agent who finds a buyer ready, willing and able to buy is entitled to the real estate commission.
Exclusive agency listing: The seller gives one real estate agent the right to act as the exclusive agent of the seller. If the agent is able to find a buyer, that agent is entitled to the commission. However, under this type of listing, the seller reserves the right to sell his own house and no commission would then be owed.
Exclusive right to sell: This type of listing agreement commits the seller to paying a real estate commission to the agent, for the period of time spelled out in the listing. Even if the seller is able to sell his own house, a commission is still owed the agent.
Multiple listing: The listing agent is given the right to circulate the availability of the house to other agents that participate in a service known as a multiple listing organization. Usually, computer print-outs are circulated on a periodic basis to every real estate agent subscribing to the multiple listing and any such agent is authorized to sell the house. The seller's commission remains the same as agreed upon in the original listing. If there are two brokers involved in the sale, generally each broker will split the commission equally. Thus you bear the terms "listing agent" and "selling agent."
Net listing: This listing obligates the agent to give the seller a net price for the house, regardless of the actual sales price. Thus, the agent is free to sell the house at any price, and is only obligated to give the seller the agreed upon net listing price. Since this type of arrangement is highly susceptible to fraud, many states have made the net listing illegal and clearly it is not recommended for sellers.
Benny L. Kass is a Washington attorney.