Broadly speaking, a listing contract is an agreement between a seller and a real estate broker authorizing the broker to sell the property. There are many types of listing contracts which are outlined below:
Exclusive Right to Listing
This is by far the most common type of listing contract between sellers and brokers. Under this type of contract, the broker is the only one authorized to sell your home. Whether or not your broker finds a buyer, they still earn a commission. This type of arrangement gives your broker the most incentive to spend time and energy to market and sell your home. An Exclusive Right to Listing contract will give you full service marketing effort from your broker, since it is the only type of agreement that will assure the broker commission when the home sells.
Exclusive Agency Listing
This type of contract is very similar to an Exclusive Right to Listing, except that the seller reserves the right to sell their property on their own and not pay the broker a commission. The broker will only get paid if your home is sold through another real estate professional. Although this arrangement seems appealing to the seller, it is not a popular choice among brokers. Under this type of agreement, the broker will risk giving considerable time and effort to sell your home, only to come away empty handed. This will put the broker and seller in competition, which is not in the best interest to establish good business practices.
An Open Listing contract is a non-exclusive agreement the seller and brokers. The broker will only earn a commission if they bring in the client who buys the home. The seller can sign an Open Listing contract with as many brokers as they want. The downfall with this type of arrangement is that the brokers will have no incentive to market the home. Generally, this type of contract is used by “For Sale by Owner’s” who are willing to pay a partial commission to a broker who helps sell their home.
Similar to an Open Listing, this type of contract allows the seller to let a real estate professional show the home to an interested client and pay a commission if that particular showing results in a sale. This agreement will prevent the seller from allowing a real estate agent show the property, and than deal directly with the client to avoid paying commission to the agent.