Leigh Anne Monk: Before your home can be placed on the market, you, the homeowner, need to sign a listing agreement. Mark, why don’t we review what the purpose and the terms are of that listing agreement?
Mark Wozniak: Sure. The real purpose of a listing agreement is to formalize the service relationship between the homeowners and the Realtor® that will be serving them. Actually, to be more technically correct it’s formalizing it with the brokerage with whom the Realtor® works for and the Realtor® is listed as the specific Realtor® who will be serving your needs as the homeowner.
And of course once this agreement is entered into this effectively if you’ve been searching for various Realtors® and doing your due diligence this would end that due diligence period because this is you agreeing that this is the Realtor® that you will be working with. Now when I talk about the homeowner or homeowners signing that agreement sometimes this can be a point of confusion.
The homeowners that need to sign the agreement are the homeowners who are on the deed of the home. So let’s say a husband and wife are both on the deed, we cannot just enter into an agreement with one spouse. We need to get the agreement of both spouses. Likewise if there are multiple people who are on the mortgage and only one person’s on the deed it’s really only that person on the deed that will be entering that will be entering into the agreement with.
Leigh Anne Monk: Exactly. So we discussed the purpose, why don’t we go through some of the terms, at a pretty high level. What are the terms of that listing agreement?
Mark Wozniak: Yeah well it can get high level and there are quite a few terms and it gets quite detailed, but let’s go over the major ones. One of the most important ones is, of course, the price for what your home will be listed or at least the initial listing price. So the agreement will say we are going to start by listing the home at this amount and then the agreement can further state that after certain periods of time if we haven’t gotten an offer on the home, we will change the listing price to this and list different tiers of pricing. Another thing that is important is the length of that listing agreement. So this is saying how long you are agreeing to work solely with this one Realtor® on listing your home. After that point you of course have the option to extend the agreement but if you don’t and the home hasn’t sold yet, it will what we call expire at which point you are certainly free to work with other Realtors®.
Another key term on there is the compensation that the Realtor® will earn if indeed they are able to produce a buyer who is ready, willing and able to purchase your home. And another important one is how soon after the agreement is signed will it officially go on the market? By officially go on the market, we mean getting it listed in the multiple listing service and having a lockbox put on your door so that folks can enter your home when you’re not there if need to view your home. So that all gets spelled out in the agreements and there are a couple of side agreements as well regarding the disclosure of various things related to your home, but the meat of it is what we just discussed.