11 Things to Know Before Signing a Listing Agreement
Once you’ve chosen your listing agent, they’ll need you to sign a listing agreement. Signing it might not feel like a big deal, but this is a legally binding contract, so it’s worth understanding exactly what you’re committing to before you do. I’ve been listing homes in Wellington and the surrounding area since 2001, and these are the 11 things I recommend sellers understand before signing.
Read the Entire Agreement, Not Just the Commission
The commission usually gets the most attention, but it isn’t the only part of a listing agreement that matters. The length of the agreement, cancellation terms, protection period, brokerage relationship, marketing obligations, compensation to other brokers, seller responsibilities, and what happens if the transaction falls apart can all carry real financial consequences. Here’s what to actually review.
1. The Length of the Agreement
Florida law requires a listing agreement to have a definite expiration date, so it should clearly state a start date and end date on the front page. The length itself is negotiable, though most brokerages have a minimum period they’ll ask for, and that minimum tends to shift with the market. An agent may be comfortable with a shorter term in a strong seller’s market, but push for six to twelve months in a slower market, since a home is less likely to sell quickly and they want enough runway to actually market it.
What matters more than the exact number of months is understanding what happens around that date: whether there’s a protection period after expiration, whether you can extend the agreement, and whether the agreement automatically continues through closing if a buyer is already under contract when the listing period ends. Most agreements do extend automatically in that last scenario, so don’t assume the listing simply disappears the moment the term ends.
2. Commission and Buyer Broker Compensation
Commission is fully negotiable and isn’t set by law, and your agreement should clearly state what you’re paying your listing brokerage. Separately, ask whether you’re agreeing to offer any compensation toward a buyer’s broker, and if so, how much and under what conditions.
Any offer of compensation to a buyer’s broker is handled outside the MLS and requires the seller’s prior written authorization. Understand both pieces individually rather than assuming a single number covers everything, and don’t assume any particular split between the two sides without confirming it in writing.
3. Additional Fees
The agreement should also spell out any additional fees the brokerage expects you to pay beyond the commission itself, which might include admin, compliance, or transaction fees. Don’t assume commission is the only amount you’ll owe. Ask specifically what else might apply, including marketing expenses, photography costs, or any cancellation fee, so you’re not caught off guard at the closing table.
4. Types of Listing Agreements
There are several types of listing agreements(opens in new tab) real estate agents use, and the type you sign defines the relationship between you and the brokerage. In practice, the overwhelming majority of Wellington sellers will encounter an Exclusive Right of Sale agreement, so it’s worth understanding that one well, along with the alternatives that exist.
With an Exclusive Right of Sale agreement, your agent and their brokerage hold exclusive rights to market your home, and you owe commission when it sells regardless of who finds the buyer, including if you find one yourself, like a friend or family member. This structure protects the agent from sellers who might otherwise claim they found their own buyer to avoid paying commission.
An exclusive agency agreement is similar, with one key difference: no commission is owed to the listing agent if you find your own buyer. Sellers considering a for sale by owner approach sometimes prefer this structure, though it’s less common with brokerages since it opens the door to doing the work without necessarily getting paid.
An open listing agreement allows you to work with multiple agents simultaneously, paying only whichever one actually brings the buyer. This is far less common, since most agents are reluctant to invest significant time and money with no guarantee of being the one who’s paid.
A net listing agreement works differently still. You agree to a set price with the agent, and anything above that amount goes to the agent instead of a standard commission. This structure isn’t legal in every state and is uncommon where it is allowed.
Whatever type you’re signing, don’t just look at the title of the document. Florida brokerages offer several versions of these agreements reflecting different brokerage relationships, single agent, transaction broker, and others, so pay attention to the specific rights and obligations in the version in front of you.
5. List Price and Terms
Before signing, you and your agent should have already discussed a proposed list price. Agents typically bring a recommended number to the table, but the seller ultimately decides. Keep in mind that the list price isn’t the price you’re obligated to accept.
Your agreement should also address the terms you’re open to, not just the number, and whether your agent has the authority to recommend price adjustments as the listing progresses. If a seller insists on an unrealistic asking price, an agent may decline the listing entirely, since nobody wants to invest marketing dollars into a listing with little realistic chance of a commission.
6. What Marketing the Listing Agent Will Actually Do
The agreement should spell out what the agent will actually do to find a buyer, not just what was discussed in conversation. That can include MLS entry, professional photography, video, social media, syndication, paid advertising, open houses, and outreach to other agents. Most agreements also include permission to use photos of your property for marketing purposes online and elsewhere.
Get the marketing promises in writing. If an agent describes professional photography, drone shots, video, and targeted social advertising during your listing appointment, confirm which of those are actually included in the agreement versus things that were simply discussed. Don’t sign based on a marketing plan that exists only in conversation.
7. Your Responsibilities and Your Agent’s
The agreement typically includes a commitment from the agent to make a reasonable, good faith effort to sell the home. It also outlines responsibilities for both sides, which can include disclosures, showings, access, communication, and keeping the property maintained and insured during the listing period.
It’s also worth knowing upfront that a listing agreement does not guarantee your home will sell. The contract typically protects the agent and broker from liability if something goes wrong while the home is listed, and may recommend additional insurance if your homeowner’s policy doesn’t offer enough coverage during the listing period.
8. What’s Included in the Sale
Standard contracts address items considered part of the real estate, and may also specifically identify personal property included in the sale, generally covering things like:
- Refrigerator
- Washer
- Dryer
- Microwave
- Window treatments (blinds, curtains, and rods)
- Lighting fixtures
- Ring doorbell
- TV wall mounts
- Pool equipment
If you have items you’d rather exclude, like a washer and dryer you just purchased, or a chandelier from a family member, those exclusions need to be written into the agreement along with the sales agreement, not assumed. Address it before the home goes on the market, not after a buyer has already written an offer.
9. Escrow Deposits and What Happens If a Deal Falls Through
When a buyer makes an accepted offer, they typically put down an earnest money deposit, also called an escrow deposit, which sits in escrow until closing or until the purchase agreement is canceled.
What actually happens to that deposit if a buyer defaults is generally governed by the purchase contract itself, not the listing agreement, so review that separately with your agent.
Your listing agreement may address something different: what happens to your relationship with your broker if the transaction falls apart, and whether the broker retains any rights if you relist or the deal is later revived.
10. Financing and Other Terms You’re Willing to Accept
Before signing, you should understand what types of financing you’re willing to accept, such as conventional, FHA, VA, cash, or seller financing, along with what contingencies and other terms you’re willing to consider. Occasionally an agent will want to exclude certain financing types based on past experience with a particular loan program.
If there’s a legitimate reason your property wouldn’t qualify, that’s worth understanding, but you shouldn’t simply accept an exclusion without asking why, since excluding a financing type unnecessarily shrinks your pool of potential buyers.
11. The Termination Clause
This is one of the most important sections to understand before you sign, and one of the most misunderstood. Under a standard Exclusive Right of Sale agreement, there generally isn’t a unilateral right for the seller to simply cancel and walk away. If you want out early, it’s typically up to the broker to agree, usually through a conditional or unconditional termination.
A conditional termination generally means you’re pausing your efforts to sell until an agreed future date, possibly still owing a fee or future compensation under certain conditions, while an unconditional termination generally ends the relationship outright, sometimes with a cancellation fee or reimbursement for marketing costs already spent.
It also helps to know that simply withdrawing your listing from the MLS is not the same thing as terminating the listing agreement itself. The agreement can still be in effect even if the property is no longer publicly listed. Given how much nuance there is here, and how much it can vary by brokerage and by the specific form used, this is a section worth asking your agent to walk through in detail, and a real estate attorney can help too if you want a second opinion before signing.
Frequently Asked Questions About Listing Agreements
Can I cancel a listing agreement early?
Generally, not unilaterally. Most standard listing agreements require the broker’s agreement to terminate early, typically through a conditional or unconditional termination, which may involve a fee or other conditions. Review this section closely with your agent before you sign, not after you want out.
How long does a listing agreement usually last?
Length is negotiable and depends on market conditions and your home’s price range, but Florida law requires every listing agreement to include a definite expiration date. Ask about what happens around that date, including any protection period or automatic extension if a buyer is already under contract.
Is the seller required to pay the buyer’s agent?
Not automatically. Compensation isn’t set by law and is fully negotiable. Your listing agreement should clearly state what you’re paying your listing brokerage and separately address whether you’re offering any compensation toward a buyer’s broker.
What’s the difference between an Exclusive Right of Sale and an exclusive agency agreement?
With an Exclusive Right of Sale agreement, your agent earns commission no matter who finds the buyer, including you. With an exclusive agency agreement, no commission is owed to the listing agent if you find your own buyer.
What is a protection period in a listing agreement?
A protection period is a window after your listing agreement ends during which your former agent may still be owed commission if you sell to a buyer who was introduced to the property during the listing period. It’s worth understanding how long that period runs and how it’s documented before you sign.
Final Thoughts
Nobody loves reading contracts, but it’s always worth reading and fully understanding any legal document before you sign it. A listing agreement is essentially an employment contract, and it’s legally binding, so make sure the terms genuinely fit your situation before you commit to them. This article is meant to help you ask better questions, not as legal advice, so for anything you’re unsure about, don’t hesitate to ask your agent directly or consult a real estate attorney.
Being careful about the type of agreement you sign can prevent real problems later in the sale and helps make sure you’ve chosen the right agent for you. If you’re still in the process of choosing, questions to ask a Realtor when selling your home and what sellers should expect from their listing agent are both good places to start before this one.
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A listing agreement is legally binding. Here are the 11 things a Realtor wants every seller to understand before signing one. #realestate #homesellingAbout the Author
Top Wellington Realtor, Michelle Gibson, wrote “11 Things to Know Before Signing a Listing Agreement.”
Michelle has specialized in residential real estate since 2001 throughout Wellington, Florida, and the surrounding area. Whether you’re looking to buy, sell, or rent, she’ll guide you through the entire transaction. If you’re ready to put her knowledge and expertise to work for you, call or email her today.
Areas of service include Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres, and more.
