Listings Flashcards
A Listing is
a Bilateral Employment Contract between principal and broker whereby the broker is employed by the principal to find a buyer and accept a deposit. It is the most essential element of an enforceable broker-principal relationship.
is a personal service contract.
A listing agreement is terminated by
Should the principle or seller die, or either party becomes incapacitated or the property is physically destroyed, such as by a fire or a natural disaster,
The listing could also be terminated by condemnation.
A material change is something that would affect
the value of the listed property. For example, when a property was listed it was zoned residential. At the last zoning board meeting, the property was changed to a commercial zone. This material change would terminate the listing agreement.
A listing contract contains many elements
- Names of the parties to the contract
- The type of agency created
- The broker’s authority and responsibilities
- The location of the property, which may be a street address
- Legal description or tax parcel number
- The listing price
- Beginning and ending dates
- Real and personal property included
- The commission to be paid
- Authorization to advertise including the placement of a For Sale sign on the property
- Type of deed used for conveyance
- The terms for termination of the contract
- An indemnification clause
- Fair housing and anti-trust information
- The signatures of parties authorized to perform
- The protection period clause
What is protection period clause is also known as an extender or carry-over clause.
The purpose of this clause is to able to close deals with buyers you found during the term of the listing.
For example, let’s say that last week you showed a property to buyers and they did not make an offer. The listing expired last night, and today the buyers called and want to make an offer. You call the seller and ask if he has listed with another company. He replies, “No.” You ask if he is still interested in selling, and he says, “Yes.” If the buyer’s offer were accepted, your company would still be due a commission, even though the listing has expired.
Exclusive Listing
In exclusive Listing, one agent is hired, therefore there is one commission however that commission can be shared with an agent that brings a buyer. The way that the commission is being divided must be disclosed to the seller.
Exclusive Authorization and right to sell Listing
Exclusive Authorization and Right to Sell Listing is a contract where the Owner agrees to sell the property in question through the Listing Broker. The Listing Broker does not need to show that he is the “Procuring Cause” of the buyer. The agent gets paid no matter who brings the buyer as long as the property sells in the agreed upon fashion.
This is when you see a broker for sale sign in the front yard. Only that broker is trying to solicit the buyer. This is what most people are accustomed to seeing.
Exclusive Agency Listing
Exclusive Agency Listing is a contract where the Seller agrees to pay one Listing Agent a commission. However if the owner sells it themselves the agent gets no commission. Thus the agent would have to prove they were the procuring cause of the buyer.
Imagine there was a brokers for sale sign in the front yard and right next to it there was a For Sale by Owner sign to it.
Open Listing
An example of an open listing would be a builder/developer who hires an employee or site representative to sell homes in a subdivision.
The developer also enters into open listings with brokerage firms in the area.
So, if the developer or the employee finds the buyer, the broker does not receive a commission.
Whoever is the procuring cause of the buyer is due a commission. As long as they are either the principle in transaction or have an active real estate license. It is not exclusive to anybody.
Imagine a home with multiple For Sale signs by different brokerage firms in the front yard.
This is an open listing and whoever sells the property gets the commission.
Net Listing
A net listing is when an agent agrees to sell an owner’s property for a set minimum price. Anything over the minimum price belongs to the agent as commission. Thus, in a net listing, there’s no stipulated selling price and no stipulated commission.
For example, a property owner wants to obtain $500,000 for their property.
If the agent sells it for $550,000, they made $50,000.
If the agent sells it for $500,000 the agent makes nothing.
This is why the agent would have to manipulate the list price in order to earn a commission, making why it is illegal in most states.
Listings with an option
If a broker is interested in buying a property that she or he has listed, this provision needs to be included in the listing agreement.
It is legal for an agent or broker to buy listed property. Most states require licensees to disclose that they have a license before an offer is made on any property that they are interested in purchasing. Many states require this disclosure to be in writing, and they may also require the disclosure of the broker’s profit in the transaction.
