2 Things to Know Before You Sign
The 2 most important documents in real estate are the Real Estate residential listing agreement and Residential Purchase Contract. These 2 contracts begin your journey into the world of buying or selling real estate.
The saying that real estate is the single largest purchase a person will make is so true. I have been through many transactions, and always try to make sure my client understand what they are about to sign.
The principle key players in any given transaction is the Seller and Buyer.The seller and buyer are the principle people in charge. Realtors are working on behalf of their respective clients. Escrow follows the contract, and is always a neutral 3rd party. Other participants are Title companies, home inspectors, termite inspectors, loan officers, and appraisers.
So with all that being said, what exactly is a Real Estate Residential Listing Agreement? The listing agreement is an employment contract between the land owner and real estate broker. The broker is employed the exclusive right to sell the property. The owner agrees to compensate the broker for bringing a “ready willing and able buyer” and the successful close of the transaction.
The First Page
The first paragraph in page 1 of the 5 page long contract sets the “who what where and when”. This is something that ALWAYS has to be defined. Without a beginning and end date you legally do not have a contract. Without the names of the parties who has the right to perform? What is the terms and conditions of broker compensation for the job well done? What is the address and legal description of the property? Does the seller have the right to sell? AND what exactly is included or excluded in the sell? AND THIS IS JUST THE FIRST PAGE.
The Second Page
Page 2 of the listing agreement establishes any lease or lien items against the title of the property. The bulk of this page then goes on to explain the importance of allowing the agent list your home into the MLS, The Multiple Listing Service. MLS is what we realtors call our bible. Any home listed with an agent goes into the MLS. The exposure missed by not using the MLS could mean a loss of thousands of dollars.
The Third Page
Page 3 explains the relationship between the listing broker and seller….everybody has duties to perform. Yes, you have things to do before, during and after the selling process. You will need to make the home ready for showings, allow the agents to show in order to find the buyer, be attentive during escrow and vacate the home on the agreed terms in the purchase contract. Also on this page in the residential listing agreement is the agency relationship clause.
Oh my, a relationship with your realtor! What this means that the realtor represents you in the transaction, BUT you should know that the real estate brokerage could bring in a buyer and create a Dual Agency. Your realtor could get another listing in your neighborhood, because why? Well that is the realtor’s job. With all the possible combinations comes a separate disclosure that will be presented to you explaining all the possible roles the realtor might or might not play. This is call the Disclosure Regarding Real Estate Agency Disclosure. This disclosure will be discussed with you BEFORE the listing agreement is presented.
The Fourth and Fifth Pages
Page 4 is not so intimidating. It deals with pictures, signs, equal housing and advising you to secure you priced possessions during showings.
Page 4 and 5 contain the rights and rules of any disagreements between you and the real estate brokerage representing you called Dispute and Resolution. Mediation and Arbitration are the tools used to handle compensation disputes. This is also the signing page between you and the listing brokerage. The listing agent is signing this page with you. The listing agent has permission from the brokerage to do this when the listing agent “hangs” their state license with the brokerage.
I have, to be sure, simplified the Real Estate Residential Listing Agreement. When the time comes for you to sit with your chosen realtor, please approach the contract with no disruptions or distractions. The difference could go from excitement to total pain.