Tips and Resources for Home Sellers

When you meet with a potential agent you should ask why they think they are the best person for the job. What do they bring to the table that couldn’t be found elsewhere for less money? How do they plan to market your property? Will they do a Broker Open House? How about consumer Open Houses? How will they let other brokers know about the listing? What kind of marketing and advertising will they do on your behalf? Are they using enhanced listings on Realtor.com? Are they using a lock box or doing accompanied showings? What are the lock box pros and cons from their perspective? Can they provide testimonials from other sellers?

You need to know the office agency or non-agency (Facilitator) policy of the agent you hire. Do they have a Designated Agency, Single Agency, Exclusive Agency, or Dual Agency default? What happens if an agent from their office brings the buyer? Is there any point where you lose full representation? What if the agent who lists your property brings the buyer? What is the likelihood of any of these conflicts? What is their personal experience with these conflicts? Are they willing to say “no” to an in-house buyer? Then ask yourself what your comfort level is regarding these conflicts.

When you have the opportunity to interview an agent we recommend you want to have them offer a good cooperating fee often called a “selling fee” in the MLS. This is the compensation that is offered to other brokerage firms and their agents who may bring your buyer. It is likely that some other firm will bring you your buyer, so in order to encourage participation you want the fee that is offered to be substantial and not less than is offered in most other listings. You also want to ask that they not lower their cooperating fee in order to cover any referral fees they are paying.

It is likely that a referral fee will be paid to us after the sale of your home closes. This referral fee is the sole compensation for the homework we do to provide you with the absolute best choice of a listing agent. Such referral fees are commonplace in real estate, and listing agents are delighted to receive our referrals. If you are planning to purchase a home with us, we will rebate an amount equal to half the referral fee to you after the closing on the home you buy through us.

A listing contract is an agreement between you, the seller, and a licensed real estate broker authorizing the broker to represent you in selling your home. By far the most common type of listing contract is the “Exclusive Right to Sell”, but there are several other types. Let’s start with the one most listing brokers push for.

Exclusive Right to Sell Listing – This is the most popular type of listing with sellers and brokers. Under an exclusive right to sell listing contract, the broker is the only one authorized to sell your home. If another agent finds a buyer, your broker earns a commission. If you find a buyer on your own, your broker still earns a commission. This arrangement gives your broker the most incentive to spend time, money and energy marketing your home, especially to other agents in the area who can show your home to their buyer clients. Only with an exclusive right to sell agreement can you expect to get a full service marketing effort from your broker, since it is the only listing type that assures a broker will get paid for their marketing expense and efforts when the home sells.

Exclusive Agency Listing – This is similar to the exclusive right to sell listing, with the significant difference that you reserve the right to sell your home yourself and not pay the broker a commission. The broker only gets paid if your home is sold through a licensed real estate professional. If you find your own buyer and sell the home yourself, you pay no commission. On the face of it, this might sound like an attractive arrangement. But it’s not a popular listing type with brokers, and for good reason.

Under an exclusive agency agreement, the broker is exposed to the risk of putting forth considerable effort and expense marketing your home, only to come away empty-handed. The attraction to the seller of this type of contract is the possibility of finding their own buyer and not paying a commission. A fairer approach would be to have an agreement for a reduced fee instead of no fee to compensate the broker for time, money and energy they expended on your behalf. However, there is no need for additional compensation if you are using a discount broker who simply places your property in the MLS for a flat fee and takes no additional responsibility from there. These types of listing agencies tend to use Exclusive Agency Listing Agreements and are called Entry Only Listings in our Boston area MLS.

Exclusive Agreement Exclusions – Sometimes a seller has someone particular in mind who may want to buy their home. An agreement can be reached with the Listing Agent stating if that person (or persons) buys there is no commission or a limited commission due. This is often used with an Exclusive Right to Sell Listing as an alternative to the Exclusive Agency Listing.

Open Listing – The open listing is a non-exclusive contract. It gives the broker permission to show potential buyers your home, and the broker will only earn a commission by bringing in a client who buys the home. Since the open listing isn’t exclusive, sellers can sign these listing agreements with as many brokers as they want. The bottom line with an open listing is that no broker has any incentive to market the home at all. They won’t even place the home on the local MLS service with an open listing. Further, it’s up to the seller to field all phone calls and coordinate all showings etc. Generally, the only people who use open listings are FSBOs (for sale by owner) who are willing to pay a partial commission to an agent for finding a buyer. You shouldn’t expect any marketing or advertising at all with an open listing contract.

Showing Listing – Also called the “one time” agreement. This is an agreement whereby a FSBO agrees to let an agent show the home to an interested client and pay a commission to the agent if that showing results in a sale, the purpose being to prevent a seller from letting an agent show the property, then deal directly with the client to avoid paying any commission.

In most cases, the listing agent wants a longer term and the seller wants a shorter term. Listing agreements can be extended and it is usually to the seller’s benefit to negotiate a shorter term agreement to determine if they want to continue with this particular company and broker. It is easy to get out of a listing agreement upon expiration. It is more difficult to terminate prior to the expiration.