DEFINITION of 'Listing Agreement'

A listing agreement is 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. The owner executes the listing agreement 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 the owner agrees to pay a commission.

A listing agreement can also cover documentation for an company’s listing of its securities on an exchange, such as the New York Stock Exchange (NYSE).

BREAKING DOWN 'Listing Agreement'

In the first definition, 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 in writing.

Because the same considerations arise in nearly 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:

Open listing

  • 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

Exclusive-agency listing

  • 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

Exclusive-right-to-sell listing

  • 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

Listing Agreement and Trading Exchanges

In order to trade on major exchanges, companies must complete listing agreements with the exchanges themselves. They must meet certain criteria; for example, in 2018, the NYSE had a key listing requirement that stipulated aggregate shareholders equity for last three fiscal years of greater than or equal to $10 million, a global market capitalization of $200 million, and a minimum share price of $4.

In addition, for initial public offerings and secondaries issuers must have 400 shareholders. Other major exchanges include the Tokyo Stock Exchange or TSE, the New York Stock Exchange (NYSE), the Nasdaq, and the London Stock Exchange (LSE).

RELATED TERMS
  1. Broker

    1. An individual or firm that charges a fee or commission for ...
  2. Exclusive Listing

    An exclusive listing is an agreement where a real estate agent ...
  3. Real Estate Agent

    A real estate agent is a licensed professional who represents ...
  4. Outside Broker

    The term outside broker has several applications in finance. ...
  5. Two Dollar Broker

    A two dollar broker is a floor broker who executes orders for ...
  6. Give Up

    Give up is a procedure in securities or commodities trading where ...
Related Articles
  1. Investing

    How to Choose the Right Real Estate Broker

    Buying or selling a home can be the major financial transaction of your life. Here's how to choose the right real estate broker or agent.
  2. Investing

    What Are The Differences Among A Real Estate Agent, A Broker And A Realtor?

    All three work in the real estate field, but there are differences between the job descriptions.
  3. Investing

    Why You Don't Need A Real Estate Agent

    While there are times when a real estate agent earns the commission, there are other times when you can do it yourself.
  4. Investing

    Career Comparison: Real Estate Agent or Mortgage Broker

    Considering a career as a Real Estate Agent or Mortgage Broker? This article can help you understand important differences between these careers.
  5. Personal Finance

    New York City Apartment Hunting: A Broker Or Not?

    New York City is one of the most difficult-to-navigate real estate markets in the world. A broker can guide you and, surprisingly, even save you money.
  6. Investing

    How Real Estate Agents Sell Their Homes For More

    A well-publicized statistic finds that when real estate agents sell their own homes, they tend to get a higher price. But why?
  7. Taxes

    Trade Properties To Keep The Taxman At Bay

    Like-kind exchanges can mean a much lower tax bill on real estate for savvy investors.
  8. Investing

    How to Make Money With Real Estate Options

    Buying real estate options is one way to invest in real estate at a lower entry cost.
  9. Investing

    Tips For Succeeding As A Real Estate Agent

    Here are a few ways of being better at prospecting, contacts management, and marketing. These and other suggestions will advance your career as a real estate agent.
RELATED FAQS
  1. How do real estate agents get listings?

    Learn about how real estate agents get listings in top real estate markets, as well as in smaller areas, through utilizing ... Read Answer >>
Trading Center