Chapter Conclusion
Chapter 6: Listing Contracts Summary
Listing agreement (must be in writing to be enforceable) creates an agency relationship authorizing a broker to serve as the agent for a principal in a real estate transaction.
- Open Listing (Buyer or Seller)
- Non-exclusive unilateral contract authorizing a broker to serve as the agent for either the sale or the purchase of property.
- Gives the seller or buyer the right to engage any number of brokers as agents.
- Only the broker who brings the “ready, willing and able” buyer or finds the right property will receive the commission.
- Exclusive-Authorization-and-Right-To-Sell (Seller)
- Broker has the exclusive rightto market the property for a specified period of time.
- If the property sells while the broker has the listing, the seller must pay the agreed upon commission, regardless of who actually procured the buyer.
- All exclusive listing contracts must contain a definite termination date.
- Exclusive Agency (Seller)
- Gives one broker the exclusive right to market and sell the property, while the owner retains the right to find a buyer and sell the property without owing the broker a commission.
- Net Listing (Seller)
- An owner sets a minimum amount that he wants to receive from the sale of the property and lets the broker have as commission any amount above the set minimum.
- Violates the broker's fiduciary responsibility of putting the client's interests above his or her own.
- Exclusive-Authorization-To-Acquire Property (Buyer)
- Authorizes the broker to act as the agent of the buyerrather than the seller.
- Commission is negotiable. Agreement must specify a definite termination date.
Bilateral employment contracts - promise to pay a commission in exchange for the broker's promise to locate a "ready, willing and able" buyer for the seller or a suitable property for the buyer.
California Listing Agreement
California law requires that the sellers receive a copy of the listing agreement at the time the signatures are obtained. A buyer has no need to ever see this agreement.
Paragraph 3 - Listing Price and Terms - unless the terms are specified, a seller is not required to pay a commission when refusing a full price offer unless the offer is all cash.
Paragraph 4 - Compensation to Broker
- The broker is still entitled to a commission if the seller makes the property unmarketable by any voluntary act during the listing period.
- Owner is not obligated to pay a commission to any other broker if the property sells within the listing period, except if the property is sold to any of the listed prospective buyers.
- The safety clause allows the broker to receive a commission if the property is sold within a specified number of days after the listing contract expires.
Paragraph 7 - Seller Representations - awareness of any legal, financial or physical reasons that would affect the seller's ability to sell the property.
Paragraph 11 - Security and Insurance - the broker is not responsible for loss or damage to the property, even with a lockbox present.
Paragraph 12 - Keysafe/Lockbox - people using the lockbox are not insured against theft, damage, vandalism, etc. attributed to lockbox use.
Paragraph 20 - Entire Contract - anything that is not written into this agreement is not part of the agreement.
Listing Packet Forms
- Seller's Advisory (SA) disclosures that sellers need to think about and do as they market their property.
- Disclosure Regarding Real Estate Agency Relationships (AD) describes the agency relationships available in California.
- Seller's Affidavit of Nonforeign Status and/or California Withholding Exemption (AS) deals with an IRS requirement that a buyer may need to withhold income tax if the seller is a "foreign person."
- Smoke Detector Statement of Compliance (SDS-11). California law requires at least one operable smoke detectorin every single-family dwelling.
- Water Heater Statement of Compliance (WHS-11). Water heaters need to be strapped, braced or anchored to resist earthquake motion.
- Notice to Buyers and Sellers - Defective Furnaces in California explains that the Consumer Product Safety Commission has issued a warning for a certain type of horizontal gas-fired attic furnace, manufactured by Consolidated Industries, which has been known to cause fires.
- Home Warranty Application or Waiver protects the buyer from major failures for up to a year after purchase. (If not interested, seller must sign a waiver indicating the policy was explained and declined.)
