There are several different types of listing contracts, but very few of them are used. The "Exclusive Right to Sell" is the most common, but there is the "open listing," the "exclusive agency listing," and the "one-time show."

The "open listing" is mostly used by people trying to sell their home by owner who are also willing to work with real estate agents. Basically, it gives a real estate agent the right to bring buyers around to view your home. If their client buys your home, the agent earns a commission. There is nothing exclusive about an open listing and a home seller can give out such listings to every agent who comes around.

For that reason, no agent who accepts an open listing is going to market your home or put it in the Multiple Listing Service. If your home fits the criteria for one of their clients, and it is convenient, they may be willing to show it to their client.

That is all an "open listing" is good for.

A "one-time show" is similar to an open listing in many respects, as it is most often used by real estate agents who are showing a FSBO (for sale by owner) to one of their clients. The home seller signs the agreement, which identifies the potential buyer and guarantees the agent a commission should that buyer purchase the home. This prevents the buyer and seller from negotiating directly later and trying to avoid paying the agent’s commission.

As with an open listing, agents will not be spending money on marketing your home and it will not be placed in the Multiple Listing System.

An "exclusive agency" listing allows an agent to list and market your home, guaranteeing them a commission if the house sells through any real estate agent or company. It also allows sellers to seek out buyers on their own.

This is not a popular type of listing agreement.

The reason an "exclusive agency" listing is unpopular is because there is no incentive for your agent and their company to spend money and time marketing your home. If you come up with your own buyer, they have spent money (and time) that cannot be earned back through the real estate commission.

Plus, it is too easy for greed and a lack of ethics to enter the picture. Some unethical buyers or sellers will try to cut out the agent, even though it was an agent's efforts that brought the buyer to the home.

If you find an agent willing to accept such a listing, do not expect too much from them. They will probably just place it in the Multiple Listing Service and sit around to see if something happens.

Giving a real estate agent the "exclusive right to sell" your property does not mean that there will not be other agents involved. Your agent is the listing agent and the most important part of his or her job is to market your home to other agents who work with buyers. Those agents will show your home to their clients. Regardless of who sells the home, even if you sell it yourself to a friend at work, your listing agent will earn a commission.

If you want full service from an an agent and his or her company, this is probably the only type of listing they will accept.  Full service means an agent will advertise your home, place it in the Multiple Listing Service, market the home to other agents, and perhaps even hold open houses.  This requires an expenditure of both time and money.

Only with an "exclusive right to sell" does an agent have a realistic expectation of earning anything on their investment in selling your home.  That is why it is the most common type of listing.

Of course, the agent and their company still have to perform in order to get paid -- your home has to sell.

Obviously the name of the seller and the property address will be included in the listing contract. There are many other things that are included, too, and you should be aware of them.

When setting the terms of sale, the main thing you are concerned with is the price. You should have a basic idea of what your home is worth by keeping track of other sales in the neighborhood. Plus, you have probably interviewed at least two real estate agents and they have given you their own ideas. Exercise great care in determining your asking price, making sure not to set it too high or too low.

In addition to the price, you will disclose what personal property, if any, goes with the house when you sell it. Personal property is anything that is not attached or fixed to the home, such as washers, dryers, refrigerators, and so on.

There may be some item that is considered "real property" that you do not intend to include in the sale. Real property is anything that is attached to the home. For example, you may have a chandelier that has been in your family for generations and you take it from home to home when you move. Since the chandelier is attached to the house, it is considered "real property" and a reasonable buyer would normally expect it to go with the house. The listing contract should make clear that it does not, and your agent should also enter this information with the Multiple Listing Service.

In most areas there is a "customary" percentage that real estate agents and companies expect to earn as a commission. The percentage varies from region to region, and depending upon whether it is residential real estate or commercial real estate. However, just like anything else in real estate, this amount is negotiable. When completing the listing agreement, you and your agent will agree on the amount of the real estate commission.

The listing contract also specifies when the commission is earned. This is important and you should pay close attention:

If a ready, willing and able buyer presents an offer that meets your listing price and terms, the agent has effectively earned the commission at that time. If a buyer presents an offer and you reach agreement on price and terms through counter-offers, the agent has also earned his or her commission.

Sellers occasionally get cold feet, just like buyers do. If this is going to happen to you - make sure you consider it before you agree to terms with a buyer.

Once you reach terms with a buyer, you have incurred two contractual obligations. One is to the buyer and the other is to your agent. if you should decide to cancel just because you've changed your mind about moving -- the agent has earned their commission according to the terms of most contracts. They will probably want to be paid.

Your listing contract should specify whether or not the house will be listed with the local MLS (multiple listing service). It is definitely in your interest to have the house listed. This is because your sales force is automatically multiplied by however many agents are members of the local MLS. If your house is not listed, then you only have one agent working for you instead of many.

This is where selling "by owner" generally fails.

Owners see that an agent puts a sign in the yard, prepares brochures, holds open houses, advertises in the paper and on the internet, and they think this is how houses are sold. It is easy to understand why owners believe that, but it just isn't so.

Listing agents do those things for three main reasons. First, because the owners expect them to. Second, because it shows other sellers how much they do to market a home, and it gets more listings. Third, because it brings in clients who want to buy "some" house - though it probably will not be yours.

Practically no one buys the house in the ad or a home they visit during an open house. Think about your own experiences when you bought the house you are now selling. How did you find it? Probably through your agent, who found it in the Multiple Listing Service.

The MLS is a huge network and practically every local agent is a member -- and those agents have clients looking to buy a home. That network is what sells your house.

Many people think of the real estate agent as a salesperson.  Many agents (perhaps most agents) would jump at the chance to be "just" a salesperson.  But they aren't just a salesperson.  Most states have legislated it so that real estate agents are also -- agents.

An agent is "responsible" to their clients.  They have a duty, called a "fiduciary duty."  This means the agent is responsible to act in the best interests of their client.  A car salesman does not have to act in your best interests -- they just have to sell the car.  It isn't that simple for real estate agents.

Real estate agents not only have to sell the house, they have to be responsible.  That involves a lot of liability, which is one reason for all the disclosures and the pages and pages of contracts, and why they want to be paid for being more than "just" a salesman.

The listing contract will specify that your agent is acting as a "seller’s agent." This means that, in the sale of your house, they are working for you and only you -- and looking out for your best interests.

However, there may be times when your listing agent has a client who wants to buy your home. For that reason, there is a little "wiggle room" in the listing contract. If your agent also represents the buyer, the listing contract should specify that they provide an additional disclosure that details whether they continue to act as your agent or assume the duties of a dual agent.

The contract also provides permission for your listing agent to act as an agent for others on other transactions. They can continue to list other properties, and represent buyers looking at other homes besides yours.

A lockbox is a basically a padlock with a cavity inside where a key to your home can be placed. Only someone with a key (electronic or mechanical) or the combination can get into the lockbox and access the key to your home. Having a lockbox available at your house makes it easy for other agents to get access to your house.

Without the lockbox, agents representing buyers would have to set appointments to meet you or your agent at the house so they could gain access and view the home. This would be inconvenient. Since almost every other house does have a lockbox available, if you do not allow one most agents will simply not show your property. You will miss out on lots of potential buyers.

The listing contract specifies whether you allow a lockbox or not. It is locked into place, usually on the front door and cannot be removed. Only other agents can access the key that is located within the lockbox.

There are times when you and your agent have a disagreement that you cannot resolve by yourselves. Maybe the agent did a poor job or misrepresented something. Maybe your agent was really doing their job correctly, but you did not understand. Perhaps the agent will have a dispute with you.

The listing contract specifies what methods will be used to settle such disputes. You can choose to accept binding arbitration, which is usually cheaper than hiring a lawyer and going to court. Usually, matters that can be dealt with in a small claims court are excluded from having to go to binding arbitration.

You are not required to sign or initial the binding arbitration clause. This would leave you free to hire an attorney and pursue disputes in civil court instead of binding arbitration. However, we are not recommending one choice or the other. That is your decision.

In most areas there is a customary percentage that real estate agents expect to earn as a commission. When completing the listing agreement, you and your agent will negotiate and agree on the amount of the real estate commission.

When you agree to a commission with a listing agent, you should keep in mind that there are usually two agents involved in most transactions.  Most of the time, only part of the commission goes to the listing agent's company.  The other portion goes to the company representing the buyer.

Some commission-related questions you could ask:

Your listing contract specifies a listing price. Your agent’s job is to bring a "ready, willing and able" buyer to present an offer. If you reach agreement with the buyer, then the agent has done his job and earned the commission. Once the sale has closed, the real estate broker gets paid from the proceeds of the sale.

If the buyer proves unable or unwilling to conclude the sale, the house is placed back on the market and the agent has to begin earning his or her commission all over again.

However, if the seller backs out or does not accept an offer that meets the price and terms of the listing agreement, the listing broker has still earned the commission. They may want to be paid, even though you did not actually sell your home. Therefore, it is very important to carefully consider every detail when completing your listing contract and accepting an offer to buy your property.

When you bought your home, you probably used the services of a real estate agent. You found that agent through a referral from a friend or family member, or through some sort of advertising or marketing. The agent helped you in many ways and eventually you found the house of your dreams, made an offer, closed the deal, and moved in.

For whatever reason, now it is time to sell your home and you need a real estate agent again. Many home sellers, especially those selling their first home, tend to think all agents are similar to the one that helped them buy their home.

Although real estate agents can (and do) work with both buyers and sellers, most tend to concentrate more on one than the other. They specialize. When you bought your home, you probably worked with a "selling agent" – an agent that works mostly with buyers. Because of the nature of real estate advertising and marketing, the public’s main image of the real estate profession is that of the selling agent (buyer's agent).

As a result, many homeowners expect their listing agent to do the same things that a selling agent does – find someone to buy their home. After all, they do the things you would expect if they were searching for buyers. A sign goes up in the front yard. Ads are placed in the local newspaper and real estate magazines. Your agent holds an open house on the weekend. Your house is proudly displayed on the Internet.

But this is only "surface" marketing. More important activity occurs behind the scenes. After the "for sale" sign goes up and flyers are printed, your agent’s main job is to market your home to other agents, not to homebuyers.

It seems fairly obvious that when you put your house up for sale that your agent will put a "for sale" sign in the front yard. The sign will identify the agent’s company, the agent, and have a phone number so prospective buyers can call and get information.

Signs are great at generating phone calls, even if very few actually purchase the home they call about. However, you might be one of the lucky ones. For that reason, you should determine what happens when someone calls the number on the sign. Does a live person answer the phone or does the call go to a voicemail or recorder?

You want someone to answer the phone while the caller is "hot." When buyers call the number on the sign, the call should go to a live person who can answer questions immediately. A potential buyer may be on the street outside your home, placing the call using a cell phone.

Also, take a look at the sign and see if it seems more interested in generating calls from buyers, or if it seems more oriented toward advertising your agent’s listing services to your neighbors.

Your agent should prepare a flyer that displays a photo and provides details about your house. There should also be a phone number so buyers can contact your agent to get additional information. The flyers should be displayed in a prominent location in your home and also in a brochure box attached to the "for sale" sign.

The brochure box is convenient for those buyers who drive by and just happen to see the "for sale" sign in front of your house. It provides enough information so they can determine if they want to follow up with a phone call or inform their own agent they are interested in your house.

copyright 2000 by Terry Light and RealEstate ABC, revised 2002