Every seller has the right to sell their home without the help of a brokerage firm and that is called a For Sale By Owner (FSBO) listing. You as an owner make the decision of accepting or rejecting an offer from a buyer represented by a real estate professional. Many times, before the buyers real estate representative will present an offer to the FSBO owner, they ask the FSBO owner to sign a commission payment agreement that guarantees the broker a commission at the time of closing. This in many states is also called an OPEN LISTING.
There are many types of listing agreements that can be used in the sale of residential real estate.
Another form of contract is the EXCLUSIVE AGENCY LISTING. The huge difference between this and the EXCLUSIVE RIGHT TO SELL is that when the agent or cooperating agents brings a buyer to the transaction the seller would have to pay for the commission. When the seller brings the buyer to the transaction the seller does not owe the agents a commission at time of closing. Many real estate professionals are reluctant to work on EXCLUSIVE AGENCY LISTINGS due to the lack of control.
An EXCLUSIVE RIGHT TO SELL listing is used close 95% of the time when it comes to listing residential real estate for sale. With this type of listing contract, no matter who brings a willing and able buyer to the transaction, the agent will earn a commission. In most markets when the buyer is brought by a cooperating agent the commission is split equally between the cooperating brokers. The length of time a listing contract runs is negotiable. It can be as short as 30 days and as long as 6 months. It just depends on your local market.
Another form of listing is the NET LISINTG. In many states the net listing might not be legal. Many times with the NET LISTING, the seller tells the real estate professional what their net price is for the home and the agent adds their commission to the net price later when they have a buyer. There might be a conflict when this situation when the agent has an offer that is much higher net than what the seller requested. In this case the seller might feel cheated. On the other hand, when the net is much lower than the seller anticipated the agent might not earn a commission and is reluctant to present the offer. In my state, Indiana, in order for a NET LISTING to be legal, the maximum amount of commission must be stated in the listing contract and has to be disclosed up front and agreed to by the seller.
When you have any questions feel free to contact the Settles Team.