Chapter 3

The Listing Agreement

How to Secure an Offer to Sell

I. Employing an Agent

Employing an Agent

A LISTING is a contract by which a principal employs an agent (broker) to do certain things for the principal, usually selling his or her property

Agency is the relationship between principal and agent wherein the agent is employed by the principal to do certain acts, like negotiating with third parties
In California, all employment contracts MUST be in writing to be enforceable

A. Right to a Commission

The listing contract is basically a bilateral contract of employment for the purpose of finding a buyer A commission is earned when the broker produces a buyer who is ready, willing, and able to purchase at the price and under the terms agreed to, whether or not escrow closes

Commissions are always negotiable

B. Type of Listings

An OPEN LISTING is a written contract authorizing one or more brokers to act as agent in the sale of the principals property for a fixed commission

A POCKET BUYER is prepared to buy a property before that property is actually listed with a broker

B. Type of Listings (cont.)

An EXCLUSIVE LISTING employs a particular broker, named in the contract, to represent the owner exclusively A COOPERATING BROKER is a non-listing broker with whom the listing broker agrees to share a commission if the non-listing broker sells a property

EXCLUSIVE AGENCY only the agent or owner can sell during a specified period

EXCLUSIVE RIGHT TO SELL broker gets a commission on ALL sales during the specified period, even if owner sells it

B. Type of Listings (cont.)

A NET LISTING the agent retains all money received in excess of a predetermined net price set by the owner A MULTIPLE LISTING is not really a listing as such, but a real estate listing service organized and administered by a group of brokers

OFFICE EXCLUSIVE the listing agent, along with members of the same firm ONLY, are given permission to show and to submit offers

A broker may represent only a buyer, only a seller, or BOTH in a transaction

II. Agency Relationship Disclosure Act

Agency Relationship Disclosure Act

Listing and selling agents are required to provide both buyers and sellers with specified written and oral agency disclosures The law applies to ALL transactions involving 1 to 4 residential units for sale or rent or manufactured homes The disclosure form must set forth the agency relationship between buyers and sellers and you, the licensee, based upon your relationship to the buyer and/or seller

A. Single Agency

As a licensee, single agency indicates that you are an agent for one party alone, representing either the seller OR the buyer

B. Dual Agency

With dual agency, you, the licensee, represent both the buying and selling parties You must be completely neutral to avoid a conflict of interest

As a fiduciary, you must give undivided loyalty to each of the parties, representing their separate interests independently For self-protection, you must inform both parties of your dual representation, obtain consent from both parties, and disclose all relevant facts to each

III. Preparing for the Listing Appointment

Listing Appointment

A LISTING INTERVIEW is an appointment with a prospective seller with the intent of persuading that seller to list their property with you at a fair market price You will need to do a market analysis of the local area to evaluate fair market value and to list the house competitively Curb appeal refers to how a house appears to a passerby, compared to the rest of the neighborhood Complete as much of the listing form as possible BEFORE leaving your office You may even compute the SELLERS PROCEEDS, that is calculate how much cash the seller will receive after all expenses are paid

A. Meeting the Listing Prospect

Remember, first impressions are the most lasting Greet the owners in a friendly manner Ask to see the house and the grounds Maintain a positive frame of mind throughout the interview

Get the owners involved as you emphasize we and our problems and solutions

B. Research Procedures in Obtaining a Listing

Most agents use title companies to obtain the legal description, lot size, zoning, and surrounding streets in the same tract as the subject property The DOCUMENTARY TRANSFER TAX paid is based on 55 per $500, or fraction thereof, of the value of real property Check out comparable sales from closed escrow files Always let the buyer check on permits to limit your liability Any assessment bonds can be either paid off by the seller or the buyer can assume them

IV. Closing the Seller

Closing the Seller

There is no distinct point in time that you start to close the seller on the listing
If you remain positive and confident throughout your interview, demonstrating that you can do the job, the owners are bound to react favorably Sellers are pleasantly surprised when you bring them a picture of their property on the cover of your Competitive Market Analysis (CMA)

A. Overcoming Objections to Listing

Owners want to save the commission sellers are paying for your expertise and services:

Marketing know-how

Saving them time

Avoiding legal entanglements Negotiations with third parties

Financing
Peace of mind

A. Overcoming Objections to Listing (cont.)

I want to think it over

They often do not understand something Specifically ask what they want to think over Go over the listing agreement, point by point with them The owners may be afraid of strangers or parting with a key to their home By persistent questioning, you should be able to find out what is troubling them

V. Servicing Listings

Servicing Listings

Service sells listings

Keep in touch on a regular basis A weekly or monthly written report stating all of your activities is very effective when showing the seller all that you are doing

A. Steps in Servicing a Listing

2. Weekly Summary

Week 1

Send a thank-you letter Set up the listing file Obtain loan info and commitments Make up information sheets and distribute them Make up ad information sheets

Week 2

Call on owners of surrounding homes Make sure sign is up Visit the owners, review ads, address any problems Call on agents who have shown the property for feedback

2. Weekly Summary (cont.)

Week 3

Visit property again Keep owners informed of market activity Discuss loan commitments Recommend changes if needed Mail copy of ad to owners

Week 4

Call sellers to discuss office and other brokers activities Show sellers copies of new listings of comparable homes Continue to plug the listing to other offices

2. Weekly Summary (cont.)

Week 5

Visit owners again Pick up cards and send flyers to cooperating brokers Check to see if improvements were made

Week 6

Visit the owners Re-evaluate price and terms in light of latest data Suggest adjustments in price and terms

2. Weekly Summary (cont.)

Week 7

Review entire picture with your clients Show them what has been done to promote a sale Emphasize that changes may need to be made to make the property more saleable Be gentle but firm in asking for a price reduction

Week 8

Continue to pitch the listing to both new and seasoned salespeople Revive their enthusiasm Re-caravan the property and discuss opinions with the seller

2. Weekly Summary (cont.)

Week 9

Get an extension, if necessary Present the seller with information on activities including ads, tear sheets, and cards Show them that despite the abundance of clients, something must be wrong with the terms, price or condition

Week 10

Call seller and review new comparables to push again for a price and/or terms adjustments If the house is vacant, suggest staging the house

2. Weekly Summary (cont.)

Week 11 to the end of the listing

If no extension has been obtained, it is crucial you get one now Visit the property regularly, making certain it is maintained appealingly Resolve any problems Continue to communicate any news of interest

CHAPTER SUMMARY

Employing An Agent

Right to a Commission Types of Listings

Preparing for the Listing Appointment

Open Listing Exclusive Listing Net Listings

Meeting the Listing Prospect Obtaining the Listing

MLS
Buyers Listing Who does the broker represent?

Closing the Seller

Overcoming Objections to Listing

Agency Relationships

Single Agency Dual Agency

Servicing the Listing