DEFINITION of 'Listing Agreement'
A document in which a property owner (as principal) contracts with a real estate broker (as agent) to find a buyer for the owner's property. A listing agreement is executed by an owner to give a real estate broker the authority to act as the owner's agent in the sale of the owner's property, for which service the owner agrees to pay a commission. Unlike a real estate contract, a listing agreement is an employment contract in which the broker is hired to represent the principal, but no real property is transferred between the two.
BREAKING DOWN 'Listing Agreement'
A listing agreement authorizes the broker to represent the principal and the principal's property to third parties, including securing and submitting offers for the property. Under the provisions of real estate license laws, only a broker can act as an agent to list, sell or rent another person's real estate, and in most states, listing agreements must be written. Because the same considerations arise in almost all real estate transactions, most listing agreements require similar information, including a description of the property (which should have lists of any personal property that will be left with the real estate when it is sold, and of any fixtures and appliances that aren't included), listing price, broker's duties, seller's duties, broker's compensation, terms for mediation, a listing-agreement termination date, and additional terms and conditions. There are several different types of listing agreements:
- The seller employs any number of brokers as agents
- Non-exclusive type of listing
- The selling broker is the only broker entitled to a commission
- The seller retains the right to sell the property independently without any obligation
- The seller employs one broker to act as the exclusive agent of the property owner
- The broker receives a commission only if he or she is the procuring cause of the sale
- The seller retains the right to sell the property independently without obligation
- One broker is appointed as the sole agent of the seller and has exclusive authorization to represent the property
- The broker receives a commission no matter who sells the property while the listing agreement is in effect