A listing agreement is a contract between you and a real estate agent giving them the right to market and sell your home. It specifies the listing price, commission rate, contract duration, marketing plan, and termination terms. In Texas, listing agreements are typically exclusive right-to-sell.
Under an exclusive right-to-sell agreement, the agent earns the commission regardless of who finds the buyer -- even if you find the buyer yourself.
Types of Listings
- Exclusive right-to-sell: The agent earns commission no matter who finds the buyer. Most common in Texas.
- Exclusive agency: The agent earns commission only if they or another agent finds the buyer. If you find the buyer yourself, you pay no commission.
- Open listing: Any agent who brings a buyer earns a commission. Rarely used because agents have little incentive to market your home.
Key Terms to Understand
- Listing price: The price you and your agent agree to market the home at.
- Commission: Typically 5-6%, split between listing and buyer's agent.
- Contract duration: Typically 6 months, but negotiable.
- Termination clause: How either party can end the agreement early.
- Marketing plan: What the agent will do to market and show your home.
How Commission Works
The commission is paid at closing from the seller's proceeds. The listing agent splits the commission with the buyer's agent. The exact amounts are specified in the listing agreement. If the buyer is unrepresented, the listing agent may earn the full commission, though this varies.
How to Negotiate the Agreement
Do not sign without understanding every term. Negotiate the commission rate, contract duration, and termination clause. Ask about the marketing plan in detail. Compare what different agents offer before signing. A good agent will welcome your questions and provide clarity on every term.
