Every home seller is presented with a listing agreement when hiring a real estate agent to sell their house.
The problem?
Many sellers enter into a listing contract without fully understanding what they’re agreeing to.
This lack of knowledge can lead to confusion, miscommunication, and even legal disputes with a Realtor.
Let’s make sure that doesn’t happen to you.
Here’s everything you need to know about the real estate listing agreement.
What is a listing agreement?
A listing agreement is a legal contract between a home seller and a real estate brokerage that grants the brokerage the right to market and sell the property.
It establishes the terms of the seller-agent relationship, including commission structure, listing duration, agent responsibilities, and seller obligations during the home-selling process.
While a seller works directly with a listing agent, the contract is technically with their brokerage.
This is because real estate agents must operate under a licensed broker, who is legally responsible for overseeing transactions.
The listing agreement formalizes this arrangement and ensures that all parties understand their roles.
Think of it as an employment contract between you and the brokerage.
You’re hiring a professional to handle a major financial transaction, and this document sets the terms.
A well-structured listing agreement protects both you and the agent by defining:
- Who is involved (seller, agent, and brokerage)
- The listing price and property details
- How the agent and broker get paid (commission structure)
- The agent’s marketing and selling responsibilities
- The seller’s obligations, including disclosure requirements
- How disputes, cancellations, or contract expirations are handled.
But not all listing agreements are the same.
The specific terms and agent compensation depend on the type of listing contract you choose.
Types of real estate listing agreements
Some listing contracts give one broker (and their Realtor) exclusive rights to sell your home, while others allow multiple brokers to compete for the sale.
Here’s a breakdown of the different types of listing agreements and how they can impact your sale.
Exclusive right to sell
An exclusive right to sell listing agreement gives your real estate agent and their brokerage the exclusive authority to market and sell your house.
During the contract period, you cannot hire another agent to represent you.
With this agreement, your listing agent is fully responsible for handling the sale, from marketing and showings to negotiations.
In return, they earn the agreed-upon commission once your home sells — regardless of who finds the buyer.
This is the most common type of listing contract and the one most sellers sign when working with a real estate agent.
Exclusive agency
An exclusive agency agreement is similar to an exclusive right to sell listing contract.
The difference?
If the seller finds the buyer without the agent’s help, they don’t have to pay a commission.
This type of Realtor contract is more common among sellers who are considering a for sale by owner (FSBO) approach but want the safety net of having an agent in case they need assistance.
Most experienced listing agents avoid exclusive agency agreements.
Why?
Because there’s a risk they could invest time and resources into marketing the home — only to earn nothing if the seller secures the buyer independently.
Open listing
An open listing agreement is exactly what it sounds like — open.
It allows a home seller to work with multiple real estate agents while also retaining the right to sell the property themselves.
Only the agent who brings in the buyer earns a commission.
And if the seller finds the buyer directly, they owe nothing to a listing agent.
The biggest advantage of this type of listing contract is flexibility.
But most experienced agents avoid open listings since there’s no guarantee they’ll be paid.
Because of this, finding an agent willing to accept this type of seller broker agreement is extremely rare.
Net listing
A net listing agreement is an uncommon and often controversial type of Realtor contract.
It allows the real estate agent to keep any amount above a minimum price set by the seller.
This is completely different from the traditional commission structure.
For example, if a seller agrees to a minimum price of $700,000 and the home sells for $750,000, the agent keeps the extra $50,000 as their commission.
This structure creates an incentive for agents to secure the highest possible price.
But it also raises ethical concerns about whether they are truly acting in the seller’s best interest.
This is why net listings are illegal in many states and heavily regulated in others.
And why most experienced listing agents and brokerages avoid them altogether.
Key sections in a listing agreement
Now let’s break down a standard listing agreement so you can understand its key terms and clauses.
Before we dive in, here are two things to keep in mind:
- Most listing agreements follow a standardized template created by your state’s real estate association and reviewed by attorneys.
- The wording may vary by state, but the essential details remain the same.
For this walkthrough, we’ll focus on the most common type of agreement used by real estate agents (exclusive right to sell).
Here’s what you’ll find in a typical listing contract.
Duration of the contract
The listing period refers to the timeframe your listing agreement remains in effect.
You’ll usually find the start date and expiration date on the first page of the contract.
These dates determine how long your real estate agent has to sell your home.
List price
Your Realtor will help you determine a listing price based on market trends, comparable sales, and your selling goals.
Once agreed upon, the price is officially recorded in your listing agreement –– but can be changed later.
Real estate commission
The commission a seller pays is outlined in the listing agreement.
But only the portion owed to the listing agent’s brokerage is included.
Previously, the buyer’s agent’s commission was also specified in the contract.
Now, it’s negotiated separately as part of the buyer’s offer, though most sellers still cover this cost.
While the structure has changed, how real estate commission works remains largely the same.
Here’s what the real estate commission details look like in the listing agreement.
Protection period clause
The protection clause in a listing contract ensures the listing broker is still compensated if they secure a buyer who:
- Viewed the property during the listing period
- Purchased the home after the agreement expired, within a specified timeframe.
This clause is typically stated as a set number of days after the contract expires.
It protects the broker from losing commission on a sale they facilitated.
Here’s what this looks like in the listing agreement:
No agreements with other brokers
This section of the listing agreement confirms that the seller has not signed a contract with another real estate broker for the same property.
Which items are included in and excluded from the sale
Do you have any specific items that you would like to include or exclude from the sale of your home?
If so, you can state this in the agreement with your Realtor.
In most sales, anything attached to the property — like light fixtures or built-in appliances — automatically stays.
But personal property such as a refrigerator, washer, or dryer can be negotiated as part of the sale.
Permission to list on the MLS and presenting all offers
The Multiple Listing Service (MLS) is a database of homes for sale that only real estate agents and brokers can access.
Listing your home on the MLS maximizes exposure by making it visible to buyer’s agents searching for properties.
Your listing agreement outlines the benefits of using the MLS and the potential impact of opting out.
It also specifies that your agent must present all offers to you unless you provide written instructions stating otherwise.
Broker and seller responsibilities
The listing contract outlines the duties of both the seller and their real estate broker (and agent).
The Realtor agrees to exercise reasonable effort and due diligence in marketing and selling the property.
Meanwhile, the seller agrees to act in good faith and to consider all offers presented — but is not obligated to accept any.
Possible dual agency
Most listing agreements include a section outlining the possibility of the real estate broker representing both the seller and the buyer in the same transaction.
This type of arrangement is known as dual agency and is legal in most states.
However, it limits how a Realtor negotiates and advises each party.
This is why it’s critical for sellers to understand the implications of dual agency before choosing a Realtor.
Security, insurance, and showings
While rare, incidents like stolen personal property or injuries during showings can happen when a home is on the market.
The listing contract states that the real estate broker is not liable for any damages, theft, or accidents that occur.
It also encourages sellers to ensure their homeowner’s insurance covers these risks or consider additional coverage.
Property photos and internet advertising
This section of the listing agreement grants the seller’s real estate agent permission to use photos and online advertising to market the property.
These tools are essential for reaching potential buyers –– but the seller must provide written consent before they can be used.
Lockbox authorization
A lockbox allows buyer’s agents to access the home for showings.
Many modern lockboxes are electronic and can only be opened through a secure smartphone app used by licensed real estate agents.
The listing agent can track who accessed the lockbox and when it was used.
The seller authorizes their Realtor to place a lockbox on the property when they acknowledge this section of the listing agreement.
Permission to place a for sale sign on your property
This is pretty straightforward.
A real estate agent needs the seller’s permission to put a for-sale sign on their property.
Don’t want a sign on your property?
You can check a box in the agreement to state this.
Dispute resolution
Every listing agreement includes legal terms explaining what happens if there is a dispute between the seller and the real estate broker.
The contract has a mediation and dispute clause that outlines the process for resolving conflicts.
This is rare and usually only happens if there is a disagreement about commission or contract terms.
Important terms to clarify in a listing agreement
The listing agreement officially kicks off the process of selling your home with a Realtor.
But overlooking key provisions can lead to misunderstandings that negatively impact your sale.
Make sure you understand these three critical details.
Cancellation terms and early termination options
Sometimes a seller chooses the wrong real estate agent and needs to sever ties with the brokerage they hired.
But canceling a listing contract isn’t always as simple as it sounds.
Most agreements give the brokerage the exclusive right to list the property for a set period, making it difficult to walk away.
Some brokers may let you switch agents within the same firm.
But getting a full release to hire a new broker?
Not easy.
If you try to cancel, expect pushback and a sales pitch for why you should stay.
To protect yourself, make sure you understand these key terms in the agreement:
- The contract’s expiration date
- Commission or fees owed for terminating early
- Whether the brokerage allows you to switch agents within the same firm.
Clarifying cancellation terms up front prevents you from being locked into an agreement that you’re not comfortable with.
Ideally, your agent agreement should allow for an easy exit — without requiring you to pay commission for early termination.
This is one of the most important factors to consider when picking a Realtor to sell your home.
Commission if the listing agent represents the buyer
The listing agreement includes a section specifying how much commission the agent will receive if they also represent the buyer.
This scenario comes at a cost to the seller.
Why?
Because a Realtor acting as a dual agent cannot fully act in the seller’s best interests when representing both sides.
But they collect a higher commission.
This is why we never recommend agents who actively seek out dual agency transactions when matching sellers with listing agents.
Confirm what the listing contract states about the increased commission if the agent represents both the buyer and seller in the transaction.
This will help you avoid any last minute surprises if you’re involved in a dual agent scenario.
Seller’s responsibility for property investigation reports
Your listing contract spells out which investigation reports you’re responsible for when selling your home. These may include:
- Preliminary title report
- General property inspection
- Termite inspection
- Roof inspection
- Natural hazard disclosure report
- Homeowners association (HOA) documents.
Some reports, like the preliminary title report, are usually required and must be given to the buyer.
Others, such as a home inspection, are optional but can work in your favor.
Providing key reports up front can make buyers more confident, reduce negotiation hurdles, and help prevent your sale from falling apart.
Review your agreement to see which reports are included and what you’re responsible for.
If certain reports aren’t required but could make your home more appealing, talk to your Realtor about whether they’re worth getting.
Understanding this up front puts you in a stronger position when offers start coming in.
Final thoughts about the listing contract
The listing agreement is a critical part of your home selling journey.
It defines how your relationship with your broker and real estate agent will operate.
And it clarifies key details like the commission rate, contract duration, and cancellation terms.
But simply understanding the contract won’t prevent you from hiring the wrong agent.
What will?
Making sure you’re aware of these key tips before signing a listing agreement –– so you can avoid costly mistakes and protect your interests.
