Now Comes the Paperwork (Part 6)
(Eating An Elephant One Bite at a Time - Part 6)
After you’ve met with several agents, reviewed their CMAs, and checked their references, you should have a pretty good idea of which Realtor to use. He or She will then ask you to sign an “Exclusive Listing Agreement” (or something similarly named), which is the contract outlining the details of the agreement between you and your Realtor, for the right to list your home for sale.
At a minimum, the Listing Agreement will specify:
- The initial list (or “asking”) price for your home
- The term of the contract (how long will you be committed to your Realtor)
- The compensation (commission) you agree to pay the real estate agent(s)
- Whether or not you agree to dual agency (described below)
Real estate agents are paid on a commission basis which means they don’t get paid unless they sell your home. The seller pays this commission which generally ranges from 4-6% of the sale price, depending on your local market.
The commission is split between the listing and selling agents’ offices. A side note, real estate agents generally receive only a portion of their company’s half of the commission, and a good agent will earn every penny!
The Listing Agreement will outline a host of other legal considerations as well which your Realtor should be able to explain in general terms. If you have difficulty understanding the contract, it is best to have an attorney review it for you.
Another form you will be asked to sign is some type of “agency disclosure”. This document defines the legal relationship between you and your real estate agent. It outlines the legal responsibilities a real estate agent has to you, as the seller.
Sometimes, your listing agent will have their own buyer for your property. Although not recommended, this contractual arrangement is called “dual agency”. If this situation arises, have your agent explain it to you in detail, and make sure you fully understand the terms before signing. If you agree to dual agency, your Realtor’s legal responsibilities to you are reduced. Very few agents can do “dual agency” effectively and get the best price for both, the seller and the buyer.
Certain forms and disclosures are required by the Federal government and are the same for all states. Others are state-specific and can be found at https://www.nar.realtor/forms/forms-for-realtors.
Your Realtor is not being a “stickler” for having you sign these various documents. He or she is protecting both, you and their agency within the law. If you are not asked to sign these forms, then your agent has missed a few steps, and it’s possible their lack of attention to detail may be detrimental to you going forward.
Other real estate terms you may come across in the sale of your home can be found in this publication: http://realtormag.realtor.org/sales-and-marketing/handouts-for-customers/for-sellers/forms-youll-need-sell-your-home
For more information about The Elephant Guide, please visit my real estate site at Marbleheadhomes.net.