Types of Listings
There are a few different types of listing agreements used here in Sullivan County. The “Exclusive Right to Sell” is the most popular and in my opinion the only one a good agent should use. I have included information on the others as well.
Open Listing
The “open listing” is little more than a seller telling an agent his house is for sale, and if they have anybody to buy it, bring them by. If the agent wants to advertise the listing, he may do so on his own dime, however if the seller finds a buyer, or another agent sells the house, then no commission is due. 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. But that is it.
Open listings never made much sense to me. And although less, they are still pretty prevalent here in the Sullivan County real estate market. Perhaps in the old days before internet marketing it may have made sense to have an open listing on your home, but now it really just hamstrings the efforts to sell. I cringe when I see a front yard littered with eight real estate signs, when in reality Joe Homebuyer home surfing the web has no idea this house is on the market. Open listings give leery sellers the illusion that they have given themselves a larger selling sphere, when in reality the opposite is true.
I do not take open listings. If after my explanation, a seller insists, I wish them luck and move on. I do keep track of the open listing market however, because every now and then there is a gem that might match a buyer I have, and that bring us to the “one time show” listing.
The One Time Show Listing Agreement
A “one-time show” agreement is basically an open listing for a single client. It is most often used by Sullivan County real estate agents who are showing a FSBO (for sale by owner) to one of their clients, (or an open listing that they do not have.) The agreement states that if the person identified in the agreement purchases the home, the seller owes a commission. This stops any sort of under the table dealings later that the buyer and seller may do in an attempt to avoid paying a commission. As with an open listing, very little effort will be made in marketing your home, and it will not be placed in the Sullivan County Multiple Listing System.
The Exclusive Agency Listing Agreement
An “exclusive agency” listing is close to an “exclusive right to sell” with one big difference. If the seller finds his or her own buyer, then no commission is owed. Seems like a pretty fair arrangement, and in some ways it is, but there are a few things that always seem to happen with these type of listing agreements. First of all it adds an element where it is possible for the seller to act unethically and attempt to avoid paying a commission. Perhaps after the agent shows the house, the buyer and seller contact each other and make their own arrangements.
These sort of shenanigans are few and far between, but the fact that they can happen is what makes this type of agreement unpopular. Mistrust is not good for any relationship. I have taken (and sold ) exclusive agency listings in the beginning days, here in Sullivan County, but I no longer do. However if a seller brings a buyer, completely independent of my marketing efforts, I have been known to drop my commission a point or two, but every situation is unique.
Many agents in Sullivan County do exclusive agency listings, but marketing is generally kept at a minimum, and there is little more done than just putting the home on the MLS.
The Exclusive Right to Sell Listing Agreement
Giving a real estate agent the “exclusive right to sell” your home is the best and most efficient way to get your home sold. You are basically guaranteeing that agent some sort of compensation if your home sells, and that gives them the freedom and confidence to market your home and attempt to sell it the best way they can. In the case of an “exclusive right to sell”, an agent can spend time and money marketing your home to prospective buyers, and to other agents. Their job is to get your home sold, and when it does, they are rewarded with a commission. That is why finding a good agent, who will spend the money on marketing, who has relationships with other agents, and who has done it before, is key in your success.
Details of a Listing Contract
First and foremost when deciding to sell your house, price must be determined. Most experts recommend calling three real estate professionals from your area to interview, and see what they think your home is worth. I agree with this tactic. You can get a good feel for the local market this way, and you can also get a good feel for which agent will be the best fit for you. Price is the number one most important factor in marketing a home.
In addition to the price, you should discuss what personal property you are planning on including with the home sale. Personal property is anything not attached to the house. For example a washer or dryer is considered personal property. Also you should determine what “real property you may be considering taking. “Real property” is anything attached or affixed to the house or property. For example a stove or a dishwasher or a chandelier is considered real property. You should disclose whatever you plan on taking to your listing agent, who should then enter this information with the Sullivan County MLS.
Other documents that are required by law:
Agency Disclosure: Simply put it is a form that states your broker works for you as a sellers agent. Unlike a car salesman, New York State law instructs that a seller of real estate must declare to all parties involved to whom their fiduciary responsibilities lie. Sellers agents must also make that clear to any prospective buyer. These fiduciary responsibilities include: Obedience, Reasonable Care, Loyalty, Confidentiality, and Accounting. As sellers agents we are bound to our clients by law. But again many sellers do not know this, and many buyers do not know this as well. Click Here for Example
Property Condition Disclosure Statement: This is a five page document that needs to be filled out by you the seller at some point before contracts are signed. It has all sorts of questions about the house, from septic to roof age, to buried medical waste. If this form is not presented to the buyer upon signing of contracts, a $500.00 credit is given to the buyer from the seller at closing. Some attorneys recommend not submitting this form. Although it will cost you five hundred bucks, they argue that it is better than getting sued if something turns up inaccurate on this statement. I counsel sellers that there is an “unknown” box to check on this form for a reason. Use it often! Click Here for Example
Lead Paint Disclosure: If your home was built before 1978, this form must be filled out. Pretty simply it asks if you have any knowledge of lead paint in the home. Click Here for Example
So that sums up listing agreements and paperwork required by law to get your home listed with a licensed real estate broker. If you have any questions, do not hesitate to drop me a line.