In the selling or purchasing of property, there are emotional aspects that factor into the decision making process for the buyer or the seller. When a homeowner is selling a house and property, they may be grieving years of memories being left behind. A buyer may be excited about a particular neighborhood and anxious about the scarcity of homes there. Part of the work of a real estate agent is to help clients through the process. The first step in buying or selling, is to find a real estate agent that can help you confidently navigate a home purchase or sale, one that listens to your concerns and knows the market. The listing agreement is the contract that contains the terms by which a real estate agent can market a property. A valid listing agreement includes information, such as the start and end date of the listing, the price of the home, the agent’s compensation, any monetary co-agreements with other real estate agents and the circumstances by which the contract can be terminated.
There are several types of listing agreements and they are all legally binding documents. An example of these includes an open listing, which allows for multiple real estate agents to compete for the sale of a property. It is the lowest level of commitment to an agent, as even the seller may bring in a buyer and do all the marketing. An open listing arrangement offers the seller flexibility and the benefit of multiple agents.
A one time show agreement is a commission contract signed between a real estate agent representing a buyer and a home owner. The agent can bring only one or a limited number of potential buyers to see the property, as agreed upon with the seller, and receives a commission only if a sale occurs with one of those buyers. This contract is useful in “for sale by owner” properties, as the real estate agent only represents the buyer wishing to see a particular home.
An exclusive right to sell is the most commonly used listing agreement. It specifies a real estate agent that will receive commission on the sale of the home, regardless if the home is sold through the efforts of someone else. It allows the agent or brokerage, full and total control over the transaction, including marketing the home, listing on multiple listing services and closing the deal.
Many real estate listing agreements are signed by sellers without fully understanding the provisions in the contract, resulting in disputes. It is important to be proactive and seek the advice and counsel of a real estate attorney prior to signing an agreement. If a dispute occurs, it can be resolved through negotiations in mediation, arbitration or litigation. Some of the common disputes occur due to breach of contract, when one party fails to follow the terms and conditions of the contract. This may occur if the buyer fails to obtain adequate financing before the closing date or if they fail to go through with the purchase due to other circumstances. Or if the seller wants to back out after the contract is signed, it is a breach of contract. Breach of duty occurs if the real estate agent acts in such a way that is detrimental to his client. A real estate agent is a proxy for his client and therefore has a fiduciary duty to represent his client’s best interest. He must disclose all the facts in an open and honest manner to the client. Some of the ways they may breach the fiduciary duty are receiving fees not disclosed to the client, failure to inform a seller of offers made on the property, failure to advise a buyer of any defects on the property or acting as a dual representative to both seller and buyer, without their knowledge. Another alleged claim in a real estate dispute can be the result of an express and implied warranty breach. These terms relate to the quality of the product and they are inclusive of a warranty to ensure a clear title to a property. In new home sales, the warranty guarantees that the house will not have any major defects that render it inhabitable and that the contractor has an obligation to repair any of the work that has been performed.
A real estate purchase is a major financial and emotional journey that can be stressful and unpredictable. The Boutty Law Firm has extensive knowledge in both residential and commercial real estate law. If you are a buyer, seller, construction professional or real estate agent with a legal issue, we can be an advocate for your rights under the law. Protect your investment and call us for a consultation today.