What Does Your Realtor’s Contract Really Mean?
When it comes to buying a home, the agreement between a buyer and a real estate agent is often just a spoken one, but the opposite is true for sellers and their realtor. Almost every seller's agent requires that their client sign a listing agreement, which is a legally binding written contract that shouldn't be taken lightly. This listing agreement lays out everything that’s expected of the realtor and the homeowner, so it dictates the terms of the entire business relationship.
That means you need to read the entire contract and fully understand it before signing your name on the dotted line. After all, everything on these pre-printed forms is negotiable!
But what exactly are you agreeing to?
First, you and your agent must agree upon the term of the agreement. This basically means you’ll define how long the realtor is going to be in charge of selling your home. The longer the term, the more time they have to find a suitable buyer – but you don't want to get stuck with an agent who isn't meeting your needs either. The best approach is to sign an agreement for only a few months at a time. If your realtor hasn’t sold your home at the end of the agreement – but you're pleased with their efforts – you can always extend the contract.
The next item on your checklist should be the realtor's commission. Although the commission rate is technically negotiable, most agents expect to receive the standard percentage (at the very least!). However, some are willing to accept a lower percentage, while others will ask for more than the industry standard. Whether you chose to negotiate the realtor's commission percentage is completely up to you and your seller's agent, and there are obviously benefits and risks involved with doing so.
Next, you must determine if you want your home listed in the Multiple Listing Service (MLS). The standard listing agreement authorizes the agent to post your home in this database so that both buyers’ agents and prospective buyers can access it on the internet. Unless your home is an exclusive property, it's generally a good idea to list your home in the MLS. After all, it helps the agent market your home to the widest audience possible, which increases the chances of you finding a suitable buyer!
Just remember – buyers’ agents can see everything on your home's MLS listing, including your realtor's commission percentage, but the general public and prospective buyers will not have access to the commission information. They can, however, check out pictures, see the listing price, and find contact information for your agent to schedule a tour, so we suggest you authorize the MLS listing.
Finally, you have to decide if you're going to have a lockbox on your home's front door or not. A lockbox is tiny key-holding safe, and it allows quick access to your home for showings. Anyone who has a key or knows the combination to the lockbox can retrieve the keys to your home. Some sellers like this because it allows agents to give tours of the property even during hours when no one is home, but other homeowners don't like the idea that multiple strangers have access to their home.
Keep in mind that your agent isn't the only one who has access to the lockbox. Buyers’ agents do too, so if you feel uncomfortable or insecure about that, make sure that your listing agreement states that only your agent has access to the lockbox, or just don't authorize the use of one at your home.
The most important thing to remember with a listing agreement is that it's a legally binding contract, but most realtors are willing to negotiate any part of the agreement that you're uncomfortable with. So, read over it carefully, consult a lawyer if you don't understand any part of it, and you should be able to work out a deal that benefits both you and the agent who is trying to sell your home!
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