Key Details:
- According to the newest consumer guide from the National Association of Realtors®, one of the first steps for sellers in working with an agent is negotiating and signing a listing agreement outlining the agent’s services, representation, and compensation.
- The aim of this consumer guide is to make sellers aware of the different types of listing agreements and how to navigate the terms of the agreement with their chosen agent.
The newest consumer guide by the National Association of Realtors (NAR) breaks down listing agreements to help home sellers choose the right agent for them and negotiate the terms of the listing agreement.
With that in mind, we’re reviewing the key points covered in the guide to highlight the most helpful and point out opportunities for you to build trust with sellers by protecting their interests.
Listing Agreement Overview
It helps to start with a clear definition of the terms:
- Definition: NAR defines a listing agreement as a contract between the homeowner and the agent, allowing the agent to represent and market the property while establishing the sales price.
- Agent Compensation: NAR reminds the seller that agent compensation is negotiable and not legally set. It’s worth noting here that this has always been the case, but it certainly can’t hurt to point that out.
Types of Agent Representation
NAR’s guide describes four specific types of listing agreements, giving the seller a chance to review and consider their options before the listing appointment.
- Exclusive Agency Listing Agreement: Homeowner works with one agent and can sell the home independently without compensating the agent.
- Exclusive Right-to-Sell Listing Agreement: Homeowner works with one agent and must compensate the agent regardless of who sells the property.
- Limited-Service Listing Agreement: Homeowner engages one agent for limited services, such as MLS listing, but not for full service like negotiations.
- Non-Exclusive Listing Agreement: Homeowner can work with one or multiple agents, compensating only the agent who sells the home.
Services Included in a Listing Agreement
The listing agreement details what the agent will do to get your home sold, specifically how they will market the property and find qualified buyers for it. Consumers should know that top agents make it a priority to show what they do for their clients—including what makes them different from the competition.
The listing agreement conversation should include local requirements related to MLS listings as well as seller concessions.
Compensation Offers
To make this clear to sellers, NAR’s consumer guide reminds them they have no obligation to make an offer of compensation for the buyer agent.
True, this wasn’t mandatory before new rules were implemented in August, but knowing this can help sellers steer clear of unethical agents who insist buyer agent comp is required.
The best agents make it abundantly clear to their clients what is required and what is not, while articulating the benefits of offering buyer agent compensation and providing reliable data to back it up.
Working with a REALTOR®
Realtors® follow the Realtor® Code of Ethics, which emphasizes protecting the client’s interests and guiding them through their buying and selling decisions, from their initial questions all the way to the closing table and beyond.
Finally, NAR’s guide urges homeowners with concerns or questions about the listing agreement or questionable agent behavior to consult an attorney.
Read the full NAR consumer guide for more information.
