Protecting Yourself with a Listing Agreement

When entering into a listing agreement, it is important to remember that a listing agreement is a contract and should be executed fully and accurately to best protect the agents from issues down the line.

The first thing you should do when you are executing a new listing agreement, is to make sure to inquire as to whether the seller had a previous listing agreement with another party.  Unfortunately, on more than one occasion, a seller has not fully understood the meaning of an “exclusive” listing agreement and has entered into a new agreement before the expiration of the first.  You can do this by direct inquiry to the seller.  It may also be helpful to double check the property’s history in the MLS to see if it had previously been listed.  If the seller did have a previous listing agreement, ask to take a look at it, and ask if there were any follow ups or modifications to the listing agreement.  A modification could be the source of an extension that you cannot see from the prior listing agreement alone.

If the seller had a previous listing agreement that was terminated, inquire as to whether it was a conditional termination with a protection period.  The protection period clause of the listing agreement may extend the agent’s entitlement to commission even after the termination of a listing agreement.

Another area of the listing agreement that can add confusion is the section on compensation.  On a listing agreement, the seller’s agent is to designate what percentage of their total commissions will be shared with a “Buyer’s Agent”, with a “Transaction broker for the Buyer”, or with a broker that has “no brokerage relationship with the Buyer or Seller”.  What amounts or percentages are entered are discretionary.  In order to know what amounts or percentages to select, it is helpful to know what each of these terms refers to.

  • A Buyer’s agent is an agent that is representing the Buyer exclusively, and who brings the buyer who ultimately purchases the property.
  • A Transaction broker for the Buyer does not work exclusively for the Buyer, but assists both parties with a limited form of representation.
  • A party with no brokerage relationship with the Buyer or Seller is a broker who is not officially representing either party, but brings a Buyer who ultimately purchases the property.

A common follow up question to these explanations, is why compensation may be available to a party without a relationship to a Buyer or Seller.  Adding compensation to this section may entice broker’s without a specific relationship to a Buyer to attempt to procure a Buyer for the property.  This could assist in broadening the pool of agent’s who are looking to match your seller’s home to a Buyer.

For your protection, we do always recommend obtaining a written listing agreement that outlines your agreement with the Seller as the best way to prevent confusion or avoid potential disputes over commissions.

If you have further questions about Listing Agreements, please consult with your broker or your local real estate attorney.


Berlin Patten Ebling, PLLC

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