how a listing agreement works
a listing agreement authorizes the broker to represent the seller and their property to third parties the listing agreement is an employment contract rather than a real estate contract the broker is hired to represent the seller but no property is transferred between the two under the provisions of real estate license laws only a broker can act as an agent to list sell or rent another person s real estate in most states listing agreements must be written because the same considerations arise in almost all real estate transactions most listing agreements require similar information starting with a description of the property the description typically includes a list of personal property that will be left with the property when it s sold as well as a list of personal property the seller expects to remove for example appliances and window treatments the listing agreement also specifies the listing price broker s duties seller s duties broker s compensation terms for mediation an automatic termination date and any additional terms and conditions though listing agreements are legally binding it s possible to terminate the contract in certain situations for example if the broker does nothing to market the property in addition the listing agreement will be terminated if the property is destroyed e g by a fire or natural disaster or upon the death bankruptcy or insanity of either the broker or seller 1types of listing agreementswith an open listing a seller retains the right to employ any number of brokers as agents it s a nonexclusive type of listing and the seller is obligated to pay a commission only to the broker who successfully finds a ready willing and able buyer the seller retains the right to sell the property independently without any obligation to pay a commission the multiple listing service mls is a shared database established by cooperating real estate brokers to provide data about properties for sale mls allows brokers to see one another s listings of properties for sale with the goal of connecting homebuyers to sellers under this arrangement both the listing and selling broker benefit by consolidating and sharing information and by sharing commissions with an exclusive agency listing one broker is authorized to act as the exclusive agent for the seller the seller retains the right to sell the property without obligation to the broker however the seller is obligated to pay a commission to the broker if the broker is the procuring cause of the sale an exclusive right to sell listing is the most commonly used contract with this type of listing agreement one broker is appointed the sole seller s agent and has exclusive authorization to represent the property the broker receives a commission no matter who sells the property while the listing agreement is in effect 