The Three Types of Listing Agreements: Open listing,exclusive agency listing, exclusive right to sell listing.

A Listing Agreement or listing contract is the agreement by which a broker is employed by the owner of real estate to sell or lease the property. The broker agrees to look for a buyer and the seller agrees to pay a commission when that buyer is found.

There are three basic types of listing agreements. The open listing, the exclusive agency and the exclusive right to sell.

1. An Open listing can be given to one or more brokers at the same time. Any one of these brokers can sell the property and earn the commission. If the owner of the property sells the property he does not pay anyone a commission. A termination date is not required and the broker is not obligated to search for a buyer under this contract. If the property is sold it will terminate the listing with other brokers.

2. An Exclusive Agency Listing gives one broker the listing for a specific period of time. The owner of the property can not hire another broker but does retain the right to sell the property him/her self without paying commission to the broker.

3. An Exclusive Right to Sell Listing gives one broker the sole and exclusive right to sell the property. The contract is for a specific length of time. If the owner sells the property he/she are obligated to pay a commission to the broker.

Personally, I like the open listing and the exclusive agency listing since it give the owner a right to sell his property while still affording a market exposure. You never know, you as the owner may get lucky. As far as listing agreements go, I think it's a disservice to the seller to insist on an exclusive right to sell listing.

However, if the broker is not confident and wants to play it safe the broker will insist on the exclusive right to sell listing so expenses can be recovered. He/she may feel psychologically compelled to go this route before putting out their best effort.

A Multiple Listing (MLS) is not a type of listing agreement, rather a service that brokers use to advertise their clients property. It is a service by which brokers pool all their listings and share the date with potential buyers from other areas. Any member of the service may sell the property and commissions are divided with a small fee going to the MLS.

A Net Listing is a listing agreement by which the seller states the net amount he/she wants after all commissions are paid. This type of listing is illegal in many states. But to get around this, just subtract the brokers rate of commission from 100 percent and divide the net figure you want by the rate.

Example:

Say the broker's commission rate is 6% and you want $200,000 for your house.

100% - 6% = 94%
$200,000 divided by .94 = $212,765. Listing price