Listing agreements
A listing agreement is the employment contract between a property owner and a brokerage. The owner (the principal) hires the broker to find a buyer or tenant, and the agreement spells out when the broker gets paid. The listing belongs to the broker, not to the sales associate who took it.
The four kinds of listings
The type of listing decides one thing above all: who has to find the buyer for the broker to earn a fee.
| Listing type | How many brokers | Owner sells on their own | Broker earns a fee when |
|---|---|---|---|
| Open listing | Any number | Owes no commission | That broker is the one who procures the buyer |
| Exclusive agency | One | Owes no commission | Anyone except the owner alone (the broker, or another broker) produces the buyer |
| Exclusive right of sale | One | Still owes commission | The property sells during the term, no matter who found the buyer |
| Net listing | Varies | Depends on the listing | The broker keeps whatever the price exceeds the owner's set "net" amount |
A few points to remember:
- Exclusive right of sale gives the broker the most protection: the fee is earned if the property sells during the term, even to a buyer the owner found.
- Exclusive agency is exclusive as to other brokers but not as to the owner. If the owner's own efforts produce the buyer, the broker earns nothing.
- Open listings are not exclusive at all. The owner can hand them to several brokers, and only the one who brings the buyer is paid.
- A net listing is really a way of setting the fee rather than a separate kind of exclusivity. The owner names the amount they want to walk away with, and the broker's pay is the difference between that figure and the sale price. Because the broker's pay rises as the owner's net figure falls below market value, net listings create an obvious conflict of interest, and some states restrict them by rule.
What Florida requires in a written listing
Fla. Stat. 475.25(1)(r) makes it grounds for discipline if a licensee fails to include, in any written listing agreement:
- a definite expiration date;
- a description of the property;
- the price and terms;
- the fee or commission; and
- a proper signature of the principal(s).
The licensee must also give the principal(s) a legible, signed, true and correct copy of the listing agreement within 24 hours of obtaining it.
Finally, the written listing may contain no provision requiring the person who signed it to notify the broker of an intention to cancel after the definite expiration date. In practice this rules out "automatic renewal" clauses that keep a listing running until the seller sends a cancellation notice. The listing simply ends on its expiration date.
Ending a listing
Like any contract, a listing ends by performance (the property sells and the broker is paid), on its expiration date, or by mutual agreement of the owner and the broker. Whatever the reason, the definite expiration date guarantees the owner a fixed end point.