When you choose a REALTOR®, you will most likely sign a listing agreement - a
contract in which you agree to allow the REALTOR® to sell your home during a
given period. The agreement says that you will pay the REALTOR® a fee when
you sell your home. Most REALTORS® are independent contractors who work for a
company operated by a licensed real estate broker. (A salesman is licensed by
the state to sell real estate through a broker. A broker is licensed by the
state to sell real estate to others for a fee and employ salesmen and other
brokers.)
The amount of compensation you pay a broker is negotiable, but the REALTOR®
will generally follow the company's policy regarding compensation. The amount
of the fee will be spelled out in the listing agreement. Make sure you
understand how the fee will be paid before signing.
Exclusive listing
Most REALTORS® will ask for an exclusive right-to-sell listing. This means
that you will owe the broker a commission regardless of who finds a buyer
during the listing period. In other words, if you decide to sell the house to
your cousin, your broker still gets a commission. The advantage of this kind
of arrangement is that the broker is motivated to work harder to sell your
home.
It's possible that a REALTOR® from another company will find a buyer for
your home. In that case, your broker is the listing broker, and the second
agent is the selling or cooperating broker. Many times your listing broker
will agree to pay the cooperating broker a fee from the amount you pay the
listing broker. Your listing broker cooperates with other brokers who procure
buyers interested in your property and offers to compensate the other brokers
for procuring a buyer. Cooperating and compensating other brokers is discussed
in the listing agreement you sign with the listing broker.
Length of listing
The listing agreement will specify how long you agree to list your house with
a company. Your REALTOR® will probably suggest an average time that homes
like yours are on the market. You want a period that's long enough to motivate
your REALTOR® to advertise your home and respond to buyers, yet short enough
to allow you to change to a different company if you become unhappy with the
REALTOR'S® service. Remember that the listing agreement is a contract. You
should get a copy for your records. Your REALTOR® is bound to the terms just
as you are. You can expect the REALTOR® to keep appropriate information
confidential and effectively market your property.
