Listing agreements outline your rights in the marketplace. Sellers have no reason to surrender those rights unless there is some obvious benefit in exchange.
Although listing agreements tend to be nicely printed, the fact remains that they are offers subject to revision, amendment and expansion prior to acceptance. The following area should all be considered negotiable.
Type of agreement: Choose the form of agreement that meets your needs rather than a form that is "standard" or "customary."
Rate of commission: The cost of brokerage services is a matter of negotiation between sellers and brokers.
Price: Brokers will seek to list a home at its market value. In the context of a typical listing contract this may obligate sellers to pay a commission when factors other than price, such as points, repairs, and deposits, are not specifically outlined in the agreement.
Sellers in this situation may wish to list a house price higher than the reasonable market value and then permit the broker to negotiate with buyers at the market price. In effect, this will give the seller a veto right over some prospective sales.
Deposits: Sellers should seek the highest feasible deposit consistent with the market. Remember that a broker is likely to receive half of any deposit that is forfeited under the terms of a typical industry sales contract.
Listing period: Many brokers try to get a listing agreement for 90 to 120 days. Sellers are best advised to get a short listing agreement for 30, 45 or 60 days. If a broker is doing a good job the listing contract can be renewed.
Points: Some listing contracts show the number of points a seller would be willing to pay to complete a sale. To do this properly sellers should contact lenders and know the market before signing a listing. Sellers should list points at or below the projected market rate for the term of the listing, You can always write in "zero" and use this factor as a bargaining chip.
Extension: Some listing forms contain language that permits the agreement to be extended after the termination date. Sellers are best advised to reject any extension clause.
Review: The listing should either be reviewed by an attorney prior to signing or completed subject to the review and approval of your lawyer.
Exclusion: If you know of specific individuals who have even the remotest interest in your property, have your attorney insert appropriate language excluding these particular individuals from the terms of the listing agreement.
Splits: The division of the commission, if required, should be shown - so much for the selling broker and so much for the lister.
Payment: The seller should have no liability to pay a brokerage fee except from the collected proceeds at settlement. This will effectively require the broker to sell the house rather than merely find a buyer who is "ready, willing and able" to purchase.
Sellers may discover that few brokers are thrilled by the prospect of an amended listing agreement. Brokers, after all, have no obligation to accept an amended offer. And certainly there is no shortage of sellers who will sign a standard industry form without revision or complaint.
Sellers should maintain a log of broker contracts showing the date, name of the broker, proposed listing terms offered by the broker, and any counter offers.