What you should know before signing a listing agreement

What you should know before signing a listing agreement When you select an agent to sell your home, they will ask you to sign a listing agreement with them. This agreement is a legally binding contract, and if you don't know what to ask for or what to look for, you could not only be losing money but also be stuck in a year-long agreement with an agent that isn't a fit for you. 

We asked real estate agent, Jay Villella, to share with you his seven key things you need to know about your listing agreement before you sign.  Below you will also find key tips on how to negotiate your listing agreement if you found potential buyers on Selling Later before you listed.

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When you hire a real estate brokerage to sell your home, you sign a listing contract with them. This contract spells out the business relationship between you and the real estate company and agent you've chosen. Contracts vary in their details but they should have several elements:


The contract should have a clear and specific beginning date and end date. In Pennsylvania, it is illegal for a listing contract to be more than 365 days, so be aware of that. The term is always negotiable.


The contract should explain exactly what, when, and how you will pay the real estate company. Many companies use a percentage commission structure so look for that term in the contract and ask the agent to calculate specific numbers for you based on different sale prices. Compensation is always negotiable.

Listing Price:

The contract must explicitly state the list price of the home.


In the overwhelming majority of cases, the real estate company will want what is called an "exclusive listing." This means that they are owed compensation if you sell your house for any reason during the term (and sometimes, for months afterwards) of the listing contract. At first glance, this may seem unfair. 
"You mean, if my family member happens to want to buy my house while it is listed, I have to pay the real estate company?" Yes.  If you think a family member, friend, or other people in your network might want to buy your house, do yourself a favor and reach out to them first before you decide to list your house. The reason real estate companies have this term is to prevent unscrupulous sellers from refusing to pay them by falsely claiming they found the buyer without the broker’s help. Sadly, this means that some sellers who truly do find their own buyer still have to pay.  

How To Save If You Already Have Interested Buyers

If you have connections from posting on Selling Later,  ask the broker to make specific exceptions to the listing contract. For instance “if Joe Smith ends up buying the house, the compensation shall be $2,000” (instead of 6%).  If you found the buyer, you shouldn't be paying full commission. 

If you want a real estate company to help you with the legal paperwork and escrow process but don't need or want their help marketing your home for sale or helping you negotiate, you can hire them as a transaction licensee. You would not be signing a listing contract in that case, but you would be hiring them to help facilitate the sale mostly by providing paperwork and ensuring compliance with relevant laws. This is a great solution if, as mentioned above, you have a family member, friend, or other acquaintance who wants to buy your house and you've already agreed on the price but just want a brokerage to formalize and finalize everything.

Early Termination:

If you are unhappy with the service provided by the real estate company, there is typically a way to fire them before the end of the term. Look for a clause in the contract that offers specifics about early termination. Usually, there will be a specific amount of time after which you have the option to cancel the contract with the proper type of notice (a certified letter, for example).

Things To Know:

Real estate brokers and agents are often required to use contracts written by third parties. For instance, if you want your home listed in the MLS, then your broker must use the listing contract written by the MLS. Your broker is not permitted to make changes to this contract. The other main listing contract used by brokers in Pennsylvania is continuously revised and updated by the Pennsylvania Association of Realtors, and again, it cannot be altered by the broker or agent.

Your agent should...

A good listing agent will give you data and fact-based advice on the asking price, help you stage and otherwise prepare the property to be appealing to the widest variety of potential buyers, offer a strong marketing plan, demonstrate strong negotiation skills and knowledge, and have excellent customer service skills. You can verify these things by asking the agent for references, looking at their online reviews, asking them about their experience selling homes in your neighborhood, and asking them to explain their relevant education and/or training.