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A listing agreement is a written, binding legal document between you, the Seller of your property and a Real Estate Brokerage. A Realtor who works for the Brokerage will help handle the sale of your home and earn a commission from it once the sale is made.
The realtor earns their commission through marketing your home in a range of ways and handling a lot of the important paperwork involved.
It is up to you, Mr./Mrs. Seller to decide how long you would like to list your home with that particular Brokerage. You can negotiate the terms of duration and payment of commissions.
The Average Duration
The average duration of most contracts is six months. If the house does not sell by then, you can list it with another Brokerage or continue with the current Broker by extending the listing date in writing. The term should be no less than three months, because that gives the Realtor the chance to get to know your property and market it effectively. The Realtor can build up momentum in order to make a good sale and thus earn a good commission.
Listing Agreements can be cancelled if agreed to by both parties, the Seller and the Broker. There may be a fee attached to cancel the listing. Know what you are signing and make sure everything is in writing. Don’t just take the word of the Realtor.
There is no average or standard commission by law. A lot of Brokerages charge a commission of 6% of the final closing price of the property. However, you might be able to negotiate a lower commission if the house is in good repair, in high demand due to its location, or just because you asked for a lower fee.
It is important to note that in some cases you might still have to pay commission even if the listing has already expired.
If the person who eventually buys is someone that the Realtor brought to the table, the clause will usually state that the commission is payable for up to 90 days after the contract has expired. This helps protect Realtors from having all their hard work taken advantage of by unscrupulous sellers and buyers trying to cut them out of the deal and save money. Again though, this like everything else is negotiable.
If you have been in discussions with other interested parties prior to the contract with the Broker, such as family members or neighbors who might want to buy your house, you can include the names of these people in order to show you are bringing in the sale and therefore there is no commission due to the Broker.
Early Cancellation of Contracts
Your contract with the Broker can be cancelled early for a number of reasons. If you don’t feel the Realtor is doing enough to market your property effectively, you are legally entitled to ask for an early cancellation or for another Realtor to be assigned.
Be clear about the responsibilities and obligations of each party and see if you can get them to be more proactive on your behalf. If they are not meeting the terms of the agreement, ask to cancel.
If they make a fuss, remind them that word-of-mouth referrals are important, and they certainly would not want to hold you to a contract when you are so unhappy with their services.