Listing Agreements

Section: Listing Agreements Estimated study time: 45 minutes Content: A listing agreement is a contract between a property owner (seller or landlord) and a licensed real estate broker, hiring the broker to find a buyer or tenant for the property. It is an employment contract — the seller is the principal, the broker is the agent (employee or special agent for the purpose of the sale). Under Massachusetts license law, all listing agreements must be in writing to be enforceable. The listing agreement must specify: the property address and description, the listing price, the commission rate or amount, the start and expiration date of the listing, the broker's authority (to market, show, accept offers, and sign documents), and any special terms. The four types of listing agreements tested in Massachusetts are: (1) Open listing — the seller may hire multiple brokers simultaneously; the commission is payable only to the broker who produces the buyer; the seller may also sell independently without paying a commission to any broker; no exclusive representation; may be oral or written. (2) Exclusive agency — the seller hires one broker exclusively but retains the right to sell independently without paying a commission; if a buyer is procured without the broker's involvement, no commission is due; must be in writing with an expiration date. (3) Exclusive right to sell — the most common listing type; the seller hires one broker exclusively and agrees to pay a commission regardless of who finds the buyer, including if the seller sells to a neighbor without the broker; must be in writing with an expiration date. (4) Net listing — the seller specifies a minimum net amount; anything above that…