Presentation on theme: "Listing Agreements and Buyer Representation"— Presentation transcript:
1 Listing Agreements and Buyer Representation LEARNING OBJECTIVES:List and describe the different types of listing agreements and buyer representation contract.Name the ways a listing agreement can be terminated and discuss each situation.Describe how a competitive market analysis (CMA) or appraisal can beused to help the seller set the listing price.List the types of information needed for a listing agreement.Identify the major provisions of a typical exclusive listing agreement.
2 Listing Agreements and Buyer Representation LECTURE OUTLINE:Listing AgreementsDefinition1. Listings are personal service contracts between the broker and the principal2. Creates an employment contract3. Most states require that they must be in writing to be enforceable in court.B. Types of listing agreements (See Figure 6.1)1. Exclusive-right-to-sell listingone broker is appointed as the sole agentfor the seller and is entitled to a commission regardless of who procuresthe buyer, including the seller2. Exclusive-agency listingone broker is appointed as the sole agent forthe seller and is entitled to a commission regardless of who procures thebuyer except the seller3. Open (non-exclusive) listingany number of brokers as well as theseller can procure the buyer, with only the procuring broker, if any, beingentitled to a commission
3 Listing Agreements and Buyer Representation LECTURE OUTLINE:Listing AgreementsC. Special listing provisions1. Multiple listing service (MLS)an organization of brokers that pools listings and distributes them to its members, who then share commissions on cooperating sales2. In Practice: Most MLS's are now computerized.3. Net listingthe broker may claim all proceeds above the net amount to theseller; illegal in some states, unethical in most others.4. Option listingthe broker has the right to purchase the listed property.
4 Listing Agreements and Buyer Representation LECTURE OUTLINE:Termination of ListingsA. Termination for any of the following reasons1. Fulfillment of the purpose of the listin2. Expiration of the time period stated in the agreement3. Destruction of the property4. A change in property use by outside forces (such as a change in zoning or condemnation under eminent domain)5. Transfer of the title to the property by operation of law (such as a bankruptcy)6. Mutual consent7. Death or incapacity of either party8. Breach or cancellation by one of the parties (although that party may laterbe liable for damages)B. Expiration of listing period.1. Contract must state definite termination date.2. Automatic extension clauses are specifically prohibited by licensing authorities in some jurisdictions; the wording of some contracts also prohibits such extensions.3. Some contain broker protection clause; protects broker who wasprocuring cause from losing commission
5 Listing Agreements and Buyer Representation LECTURE OUTLINE:The Listing ProcessA. Pricing the property1. Market valuethe most probable price a property would bring in an arm's length transaction under normal conditions on the open market2. A competitive market analysis (CMA) is valuable to the seller in helping to pricethe property.3. An appraisal might not be warranted when the listing is taken. Sellermay prefer formal appraisal.B. Math Concept: Calculating Sales Prices, Commissions and Net to SellerC. Information needed for listing agreements:1. Names and relationships, if any, of the owners2. Street address of the property3. Size of the improvements (residence, garage, et cetera)4. Age of the improvements and their type of construction5. Numbers and the sizes of the rooms ("room count")6. Size of the lot, including its dimensions
6 Listing Agreements and Buyer Representation LECTURE OUTLINE:The Listing Process7. Existing loans on the property8. Possibility of seller financing9. Amount of any outstanding special assessments and who will pay them10. Zoning classification of the property11. Current (or most recent year's) property taxes12. Neighborhood (schools, parks and recreational areas, churches, public transportation)13. Any real property to be removed from the premises by the seller and any personal property to be left on the premises for the buyer14. Any additional information that would make the property more appealing and marketable15. Any required disclosures concerning agency representation and propertycondition.D. Disclosuresstate's laws regarding agency and property conditions(See Chapter 4)
7 Listing Agreements and Buyer Representation LECTURE OUTLINE:The Listing Contract Form (See Figure 6.2)The listing contract form1. Type of agency created2. Broker's authority and responsibilities3. Names of all the parties to the contract4. Brokerage firm5. Listing price6. Real property and personal property7. Leased equipment8. Description of the premises9. Proposed dates for the closing and for the buyer's possession10. The closing (Settlement)11. Evidence of ownership12. Encumbrances13. Broker protection clause14. Homeowner warranty program15. Warranties by the owner
8 Listing Agreements and Buyer Representation LECTURE OUTLINE:The Listing Contract Form (See Figure 6.2)16. Indemnification ("hold harmless") wording17. Nondiscrimination ("equal opportunity") wording18. Antitrust wording19. Signatures of the parties20. Date the contract is signedBuyer Agency Agreements (See Figure 6.3)Employment1. Broker - Buyer Agent2. Principal- Buyer3. Purpose - to find suitable property4. Fiduciary relationship
9 Listing Agreements and Buyer Representation LECTURE OUTLINE:Buyer Agency Agreements (See Figure 6.3)B. Types of Buyer Agency Agreements1. Exclusive buyer agency agreementa. Completely exclusive agency agreement.b. Buyer legally bound to compensate broker whether locatedproperty or not2. Exclusive agency buyer agency agreementa. Limits broker’s right to compensationb. Buyer free to find property on own3. Open buyer agency agreementa. Non-exclusive agency contractb. Buyer may enter into similar agreements with unlimited number of brokers.
10 Listing Agreements and Buyer Representation LECTURE OUTLINE:Buyer Agency Agreements (See Figure 6.3)C. Buyer Representation Issues1. Explain agency agreement2. Parties rights and responsibilities3. Compensationa. Flat fee, hourly rate, or percentageb. Retainerc. Source - either party, seller or buyerd. Always negotiable4. Buyer financial Information