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Listing Agreement: What to Know Before You Sign

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You’re ready to sell your home. You found the perfect real estate agent, and you’re more prepared than ever to get your property on the market. But first, you’ll probably need to sign a listing agreement.

The listing agreement (or listing contract) provides a structure for the sale of your home. It lays out a framework for the duties and expectations between you and your agent.

Listing agreements are used almost everywhere. They’re used with homes in Miami, FL to Vancouver, BC, and countless places in between.

Signing any contract can be nerve-wracking, but it doesn’t have to be as intimidating as it sounds. Here’s what you need to know.

What is a listing agreement?

A listing agreement is a legally binding contract between the seller (you) and the real estate brokerage that will be helping you sell your home. It states that the seller is hiring the agent to handle their home sale and authorizes them to find a buyer. In exchange, the seller agrees to pay the agent a commission fee.

Only sellers need to sign a listing agreement. But potential buyers may need to sign a buyer’s agency agreement before an agent will represent them.

What to expect in a listing agreement

A real estate listing agreement usually includes several essential details about the upcoming sale. You’ll want to look them over carefully to make sure everything checks out.

The listing agreement will include things like:

  • Contact information
  • Listing price
  • Agent fees
  • Agent duties
  • Property description
  • Items included in the property sale
  • Items that will be removed after closing
  • Agreement duration
  • Conflict resolution details
  • Protection periods
  • Type of agreement

Here’s what to expect from each one:

Contact information

This can include names, phone numbers, addresses, and other information for the seller and real estate broker or agent. Which contact details are included depends on how the agreement is written.

Listing price

This is the sales price your home will be listed at. You and your agent will talk about the listing price ahead of time, so make sure it matches your earlier conversations.

Agent fees

Real estate agent fees usually come as a percentage of the home’s final sale price. Total commissions tend to hover around 6%, split evenly between the buyer’s and seller’s realtors. The seller usually pays both.

For example, if a property sells for $250,000 and the agreed-upon commission is 6%, the seller would owe 3% to their agent ($7,500) and 3% to the buyer’s agent ($7,500). Real estate commissions are negotiable.

Agent duties

These are your expectations of the agent and what you give them permission to do. For example, if you want your agent to hold open houses or list your home on an MLS (multiple listing service), you’ll grant them formal permission in this section.

Understanding the agent’s responsibilities will give you a clear idea of what they will (and will not) do during the selling process.

Property description

The property description includes:

Items included in the sale: Here you’ll find any personal property left behind after the property is sold. It often includes large appliances like washers, dryers, ovens, and refrigerators.

Items not included in the sale: Anything you’re taking with you or getting rid of before the buyer takes possession of the home.

Agreement duration

The amount of time the realtor will represent you before the agreement terminates. Most real estate listing agreements include a default duration, but this is negotiable.

Some agents prefer a longer term (six months), but you may decide a shorter period would be better (three months). An agent may be willing to change these details if you’d like them to.

Conflict resolution details

This legal-heavy part of the document lays out how any potential disputes are resolved between the property owner and agent. It will probably specify whether conflicts are settled using mediation (a third party helps the parties reach an agreement) or arbitration (a third party makes the decision).

Odds are you probably won’t have to deal with a formal dispute. But it always helps to understand this section, just in case you need it down the road.

Protection period

A protection period, sometimes called a tail period, helps protect the seller’s agent from losing their commission. It stays in effect for a certain amount of time after the listing agreement expires.

A protection period kicks in when the agent shows the house to someone during the listing agreement period, but that person doesn’t buy the home until after the listing agreement has expired. If there’s a protection period clause in the agreement, the seller would still pay the agent their full commission.

Type of agreement

Most agreements will specify one of four types of listings:

  1. Exclusive right-to-sell listing
  2. Exclusive agency listing
  3. Open listing
  4. Net listing

Read on to learn how each type changes your relationship with a real estate agent.

white house with front garden and patio

4 types of listing agreements

Listing agreements usually come in one of four types. Your agreement type is often listed at the top of the document itself.

These names can vary based on where you live, so read the listing agreement closely to understand the specific contract you have with your broker or agent.

  1. Exclusive right-to-sell listing agreement: The most common type of listing agreement. Exclusive right-to-sell listings give the listing agent and their brokerage exclusive rights to represent the seller’s home. The agent is entitled to their commission regardless of who sells the property, as long as the listing agreement is in effect.
  2. Exclusive agency listing agreement: This is similar to an exclusive right-to-sell listing. The only difference is that an exclusive agency listing gives the seller a way out of paying a commission: by selling the home themselves. If they successfully sell the property on their own, they don’t have to pay their agent.
  3. Open listing agreement: Think of an open listing as a “last agent standing” competition. This non-exclusive agreement allows the seller to use multiple real estate agents to sell their home. The agent who sells the home is the only one who gets a commission. It also gives sellers the power to try to sell the home themselves, even while other agents are trying to sell it too. If the property owner succeeds, the agents walk away empty-handed. For this reason, most real estate agents will be hesitant to sign an open listing agreement.
  4. Net listing agreement: With a net listing agreement, the seller agrees on an acceptable home sale price with their agent. If the agent sells the home for more than that price, they get to keep the proceeds. Net listings are uncommon, and actually illegal in some states.

5 easy things to double-check (and triple-check) before you sign a listing agreement

The entire listing agreement is important, but you can double-check five crucial details in a handful of seconds:

  1. The listing price
  2. The agreement’s expiration date
  3. The commission rate and how it’s divided with the buyer’s agent
  4. The type of listing agreement
  5. Your personal property that is or isn’t included with the transaction

These details are easy to verify, but they aren’t the only things you should look for in your listing agreement. Try to read it as many times as you need to completely understand what’s in it.

aerial view of san carlos california

Listing agreement FAQs

When do you sign the listing agreement? 

You’ll sign the listing agreement after you and the agent have agreed on all the details of your real estate transaction. By signing, you’re stating that you’re ready for the agent to move forward with the steps needed to sell your home.

Do I have to sign the listing agreement?

Yes. The listing agreement is a legally binding document that outlines your preferences along with the agent’s duties. If you choose to sell your home yourself, you won’t need to sign a listing agreement since you’ll represent yourself.

Can I negotiate a listing agreement?

You can negotiate several parts of a listing agreement. These include:

  • Agent commission
  • Agent duties
  • List price
  • Agreement duration
  • Listing type

Most minor changes can be made right on the contract, but bigger changes might need to be added to an addendum at the end of the agreement.

How long does a listing agreement last?

In general, a listing agreement can last for any amount of time you and your agent agree on. Most listing agreements last three to six months.

Shorter time frames allow you to hire a new agent if you aren’t happy with your current agent. But if the duration is too short, an agent may not want to risk walking away without a commission.

If the agreement expires and you’re satisfied with your agent’s work, it’s easy to renew the contract.

How much does a listing agreement cost?

It usually doesn’t cost anything to sign the listing agreement itself. You probably won’t pay anything upfront, but the contract will specify the broker or agent’s commission fee. This fee is paid at closing once the title company confirms a clear title and the property is formally signed over to the buyer.

What if my home doesn’t sell?

If your home doesn’t sell within the time frame outlined in the listing agreement, you have two options:

  1. Renew the agreement and keep your current agent
  2. Hire a different agent

If you choose to find a new agent, review the termination section of the agreement to make sure you won’t owe any fees for the expenses incurred during the listing period.

Can I make changes to the listing agreement after I sign it?

Yes, but only if all parties agree. Most modifications to a listing agreement are done in writing, either directly on the agreement itself or through a listing agreement addendum (more information added to the end of the document).

I have questions about my specific listing agreement. Who should I talk to?

A licensed, local attorney is the most qualified person to answer your questions. They’ll be able to address your concerns and point out any potential issues in the contract.

Redfin does not provide legal advice. This article is for informational purposes only and is not a substitute for professional advice from a licensed attorney.

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