T
he National Association of Realtors (NAR) has released a consumer guide covering various types of listing agreements between sellers and their agents, including the negotiable nature of agent compensation. When selling a home with a real estate professional, one of the first steps is negotiating and signing a listing agreement. This guide explains what you need to know about these agreements.
There are four main types of listing agreements:
* Exclusive agency: The seller works with one agent and pays them only if they sell the property.
* Exclusive right to sell: The seller works with one agent and pays them regardless of who sells the property. This type is valid for a set period, usually six months.
* Limited service: The agent provides specific support, such as listing on an MLS, but may not handle showings or offer counsel.
* Non-exclusive: The seller works with multiple agents and only pays the one who sells their home.
Agent compensation is fully negotiable, allowing sellers to choose whether to include an offer of compensation for the buyer's agent. This decision should be made in consultation with the agent, taking into account market conditions and personal preferences.
A consumer watchdog group, the Consumer Federation of America, has also weighed in on listing agreements. In July, they released a blueprint recommending that commissions be paid as a flat fee or hourly rate rather than a percentage of the home sale price. This approach departs from industry norms but aims to promote fairness in seller contracts.
