Things to discuss with your Agent/Realtor, when listing your home for sale.
It is time to downsize. The kids moved out a while ago and you have more space than you need. Every time you turn around, you feel like your real estate taxes keep going up. It is time to simplify and skip a few winters. You are not looking forward to getting rid of 20+ years of stuff, but you know it will be worth it.
For months, you have been agonizing over this. You’ve been checking Realtor.com and Zillow.com every day to see what prices are like. You see other homes, not as nice as yours, selling for a fair price. You think you can get what you need to be able to pay cash for a smaller place.
You found a rockstar real estate broker (also known as a Realtor or Agent). You met with them. You finally completed the list of items you needed to do to get your house showing-ready. You knew you had to de-clutter a bit and fix that leaky toilet anyway. Your Agent gave you the friendly reminder you needed to get it done. Now, you are ready to tell the world your house is for sale.
But, there is one more small detail. Your Agent sends you a listing agreement that you need to sign. You know the listing price and your Agent quoted a fair price on the commission. Part of you wants to click through and DocuSign it. But, there is a little voice in your head telling you to read it first.
Most listing agreements are pretty standard and straightforward. It is very rare to have a dispute with an Agent over a listing agreement. If things are not working out, most agents will try to part ways on a positive note.
But, there are a few things to think about when you are looking at a listing agreement.
Here are some things you may want to discuss with your Agent about your listing agreement.
1. Asking Price: Does it list the price you want to start with?
You need to make sure you are on the same page about the price you want to start at. You will also want to discuss your approximate net proceeds. Another important point is how you are going to allow price changes (if they are necessary).
2. Term: How long is the listing agreement for? Can you cancel early? How? If you do, do you owe any money?
Your Agent is managing the marketing of your property. They are educating you about the market. You need to be on the same page about how long selling your home should take.
a. Is there a “protection period”?
This is a time, after the end of your listing agreement, where you may still have to your Agent their commission. During this time, if you sell to someone your Agent showed your property to, you may have to pay their commission. Some agreements have an exception if you list your home with another agent.
3. Commission: How much are you going to pay?
Most of the time, this is straight forward. You agree to pay _% of the sales price in commission. But, some listing agreements have some nuances to the commission like:
- Extra fees (marketing fee, listing fee, MLS fee);
- Fees for pictures; and
- Cancellation fees.
The commission percentage quoted is usually the total commission. This includes the commission paid to the Buyer’s Agent. It is a good idea to verify this with your Agent.
4. Is this an exclusive listing agreement?
Meaning, are you giving your Agent the exclusive right to market and sell your property. Most good agents will need this because they are going to work hard to sell your property. If you find a Buyer, like your neighbor, you will still need to pay your Agent the agreed upon commission amount.
5. Are you OK with dual agency (when one Agent represents both the Buyer and the Seller)?
This is a double-edged sword. On the plus side, your Agent has every incentive to bring well qualified Buyers that want to go forward. But, your Agent has to be careful to protect everyone’s confidential information. In some situations, this means that your Agent may not be able to give you strategic advice. If you are using a real estate attorney, they may be able to help you with strategic advice.
6. Are you required to use a specific title company?
This can be a very large closing cost and you should have the option to shop around. If you use a real estate attorney, they will help you clear up title issues. This one reason many real estate attorneys prefer certain title companies.
7. What are your agent’s duties?
Most Sellers want that their property listed on the MLS (multiple listing service). But, if you have privacy concerns, you may want to know what information will be available on the internet. Will there be a yard sign? Will there be professional pictures taken and posted?
Most Realtors will install a lockbox at your house so other Agents can access and show your property. You want to be clear about any specific showing requests. These are things like needing extra time to let the dogs out or put personal things away.
8. Will your Agent be doing open houses (where the public can drop in and take a look)?
Some Agents have great success with an open house. This is a double-edged sword. On one side, it is a great way to get people in the area to look at your house. On the other side, you are opening your home to the public and many people are not accompanied by an Agent. Sometimes many families will show up at the same time. If this happens, it very hard to keep tabs on everyone. It is important to discuss these issues with your Agent and make an informed decision.
9. Will your agent be hosting an exclusive Realtor tour? (An open house for Realtors.)
If this is an option, it is important to find out what your Agent will be doing to get Realtors to come to the house. Realtor tours sometimes have lunch, snacks and goody bags. It is important to find out who is going to be paying for these things.
10. Make sure all agreement changes are in writing.
Most listing agreements are with your agent’s managing broker (or brokerage company). If something happens with your Agent, you still have a contract with their broker or company. This is why it is best to have all the details in writing.
DISCLAIMER: This is not intended as legal advice and is in no way a comprehensive list. It is some thoughts from you friendly neighborhood real estate attorney. For legal advice, you should always contact a local attorney.