What is an Agreement in Florida Listing?
The definition of a Florida listing agreement is a legal agreement where a property owner hires a licensed real estate broker to market their property. The listing agreement between the seller and broker is an employment contract. Based on this employment contract, the real estate broker takes responsibility to actively promote the sale of the subject residential or commercial property. Further , the listing agreement must contain the following: The signed listing agreement becomes an earnest offer for the sale of the subject property. The listing agreement is governed by Florida Statutes and Florida Real Estate Commission rules. Additionally, all parties to the listing agreement must be properly represented. This can be through a single agent, transaction broker, or non-represented.
Three Types of Listing Agreements in Florida
Florida listing agreements can be subdivided into three main types: the exclusive right-to-sell agreement, the exclusive agency agreement, and the open listing agreement. The one thing to know about them all is: these agreements are all contracts.
An exclusive right-to-sell agreement provides the broker with "sole and exclusive right to sell or lease" the property during the contract. An exclusive agency agreement provides the broker with "sole and exclusive right to sell or lease" the property, but without any guarantee of payment in the event the seller procures the buyer by themselves. An open listing agreement has no other party – except the seller – given any rights or entitlements.
Each of these forms of listing agreements grant a real estate salesperson the "sole and exclusive right, power, and authority" to sell or lease the property at the stated price within the stated time, or at any other price acceptable to the owner.
With an exclusive right-to-sell or exclusive agency listing agreement, if the house sells regardless of who brings the buyer (the seller or the broker), the broker is entitled to the commission. With an open listing—sometimes known as a non-exclusive listing agreement—the salesperson may share the commission with another Real Estate salesperson who sells the property.
In Florida, there are other types of real estate sales contracts such as net listings, offset listing and exclusive auction listing. Almost all of these types of agreements ultimately find their way back to the exclusive right to sell listing agreement.
Also as part of the listing agreement is how the compensation is set for the agent. On most exclusive right-to-sell listing agreements, the owner specifies a percentage of the net sale proceeds, like 6%. With open listings, the salesperson usually gets paid either by a flat hourly rate or a flat fee after the sale.
The key point about all of these: Like a marriage or divorce agreement that may or may not go as expected, when buying or selling real estate in Florida, the parties need to be aware of what a listing agreement looks like.
Elements of a Listing Agreement in Florida
The critical elements of a Florida listing agreement, whether written on the standard Florida Association of Realtors (FAR) or Business Real Estate (BRE) form or another form, are identical. Most important are (1) the description of the property, identifying any improvements thereon, (2) the price, (3) the commission structure – the percentage of sale price to be paid and the method of its calculation, and (4) the listing period – how long the listing will be in effect. The Florida listing agreement contains many details that you should understand before signing, but these four are the crux of it. Pricing your property is extremely important. Knowing what recently sold comparable properties are bringing and if there is any upward movement in the local market can help determine a fair price. You should consider getting an appraisal. Sales commissions have been increasing and a shortest -to – longest list of commission arrangements is: 1) percentage of the sale price, 2) fixed fee with a percentage paid to the broker, and 3) straight fixed fee for services. If you choose the last alternative be very careful to spell out all possible fees, such as fees for advertising, signage, etc. Your fixed fee sales professional can quickly eat up their fee and you may not be properly represented in the transaction. Do not let your listing agreement expire without taking some action. Although an owner has the right to sign a new listing agreement and possibly change both real estate professionals and the real estate firm, make clear to both your real estate professional and the firm that you expect some action from them before the listing period expires. Exclusive Right of Sale agreements entitle the real estate professionals to their commission regardless of subsequent happenings and can be a good choice. Listings signed by owners are generally valid for only one year. On the downside, they may be listed in all the property sites under the name of the owner and their telephone number, obscuring the fact that the broker is the representing party who shall be entitled to a fee and/or other fees. The adage "You cannot get a quart from a pint bottle" applies to real estate sales professionals, too. Those professionals know that they do better work when they have enough time to do a proper job and are thus a little choosy with the time interval that will be called for in each listing agreement. Having said that, honest practitioners of the profession will point out that some properties are indeed likely to sell quickly and therefore a 60 day listing period may be warranted, though they would prefer that the listing period be longer. Please remember, the listing agreement is a contract for valuable consideration even if no money changes hands. Under Florida law before exercising any contractual rights or pursuing equitable or legal relief, the party seeking relief must perform its obligations or indicate that they are ready, willing and able to perform them. Only then can it enforce its rights.
Duties of the Seller and the Agent
The terms of the listing agreement are not mere recommendations. They are legally binding obligations for both the seller and the agent. The seller must honor the terms of the agreement, including the agreed upon price and duration, and the agent must honor the compensation structure for the broker. Neither party can unilaterally change the agreement without mutual consent. If you, as a seller, accept a purchase offer on your property before the end date of the listing agreement, and then sell the property at that price, the listing agent will likely be entitled to any commission or fees stated in the contract, even if the listing had expired by the time the sale closed.
It is critical, then, for both agents and sellers to be aware of the upcoming expiration of a listing agreement and the ramifications of such a change. If the property is moving slowly, the seller may not want an abrupt end to the listing with little to show for their investment of time or money. It is always best to discuss these matters with an attorney or financial advisor before proceeding with a buy-sell agreement outside of the stipulated time frame than to deal with potential litigation later.
What are Sellers’ Rights
A closer look at the Florida listing agreement exposes a variety of rights and protections afforded by the contract to the seller. The listing agreement is written almost entirely in favor of the real estate broker, but the seller is provided a significant number of additional rights as well. A seller can unilaterally terminate the listing agreement without penalty if the broker is unwilling or unable to provide a quality service to both the seller and to any buyer they might procure. The same sentiment is expressed if the seller loses confidence in the real estate broker due to any fault of the broker. The seller can, of course, unilaterally terminate the listing agreement at any time with 30 days notice, actuarially fulfilling the obligations under the statute to keep a file for 18 months, and , providing the statutory 30 notice.
If the seller becomes aware at any time that the property owner is actually an unauthorized someone else who is not entitled to receive the proceeds from the sale, the seller may terminate the listing without penalty upon five days notice. If the listing is a residential listing and the owner gives notice of discontinuation of the contract more than 10 days prior to the expiration of the initial term of the listing, the listing shall be extended for the period of time that notice was made. Even in death situations, the listing will not terminate until 30 days have expired and the personal representative or administrator fails to sign a new listing. These seller’s rights are some of the most important rights written into the standard Florida listing agreement.
How to Select a Listing Agreement
For a seller in the Florida real estate market, the first step towards a successful property sale starts with choosing the right type of listing agreement with their realtor. Each type of listing agreement serves a different purpose, and understanding which one aligns with your needs is key. The three primary types of Florida listing agreements are the exclusive right of sale, exclusive agency, and open listing agreements.
Exclusive Right of Sale Agreement
A Florida exclusive right of sale agreement gives the real estate agent a legal right to sell the property and receive commissions. The agent earns a commission regardless of who sells the property, even if it is sold directly to the owner without any involvement from the agent. "Exclusive right of sale" listing agreements are the most common type of listing for selling homes in the state.
Exclusive Agency Agreement
Exclusive agency listing agreements are similar to exclusive right of sale agreements, but with one important difference: the owner retains the right to sell the property themselves. The real estate agent does not receive a commission if the owner finds a buyer outside of the agent. The commission is usually lower than with an exclusive right of sale listing.
Open Listing Agreement
The open listing agreement is the least common type of listing agreement and is generally not recommended. In an open listing, the owner can hire multiple real estate agents to list the property, but they only pay a commission to the agent who sells the property. This type of agreement creates a lot of competition for the agents, so the seller will likely receive less attention, time and effort to sell their property.
Choosing the right listing agreement will depend on the seller’s goals, timeframe and level of trust in their real estate agent. It is always sensible to carefully consider the terms and conditions before signing. Once a listing agreement is signed, the seller is legally bound by its terms, even if they change their mind about the type of agreement or want a different arrangement after it is signed.
Pitfalls and How to Avoid Them
Common pitfalls occur regularly when you enter into a listing agreement. They can happen to the seller or the agent. Here are a few common ones, and tips on how to avoid them.
- Not sharing the listing agreement with other family members. If someone else owns the property with you, they likely need to sign the listing agreement as well. Remember that a married couple is deemed to own real estate as one entity, even if only one spouse’s signature is on the deed.
- Listing the property for the wrong amount. Make sure your realtor provides you with comprehensive recent sales data from the area before determining the listing price.
- Failing to identify all and any prior contracts on the property. The realtor should be familiar with property records. She/he can obtain all previous listing agreements, covenants, building restrictions, proposed sales contracts, and/or offers not accepted, deeds, mortgages, easements, etc.
- Failing to disclose that property has been listed previously. You may decide to change your realtor, have a new strategy, or change your goals and withdraw a listing. If you choose to re-list the property, be sure to tell your new realtor that a listing has previously been used. Your new realtor will probably want to know why and what happened to the agreement.
- Leaving out critical details. For example, if the property has a lease in effect, provide the dates of the lease and the name of the tenant. This prevents the buyer from inquiring about the lease during their due diligence period.
- Agreeing to a listing term that is too short or too long. Also, remember that if your listing is too short, it may be terminated before you ever see a significant showing, which means there is no opportunity for buyers to recognize the value of your home. Alternatively, it may be too long if you have already moved away, and are anxious to sell.
- Failing to allow a reasonable amount of time between showings. This mistake can cause the homeowner and the realtor to lose track of the fact that a showing is scheduled.
- Not being available for showings. Be flexible and always try to be away when the property is shown so that potential buyers are at ease in case they arrive when you are at home.
Smartly navigating through listing agreements will benefit both the seller and the agent alike.
Frequently Asked Questions About Florida Listing Agreements
Do I need a listing agreement to sell my house?
Nothing requires you to have a listing agreement in order to sell your property, but a listing agreement with an agent is usually a smart business decision.
What if I have a listing agreement but decide to sell the house myself?
A listing agreement does not constitute an agency relationship between you and the agent until the agent performs under the contract. So, if you don’t have your house sold by a certain date and decide to sell it yourself, you’re free to do so provided you don’t breach your listing agreement.
How long does a listing agreement last?
There is no standard length for a listing agreement in Florida. The time frame used to be 6 months but this language is now replaced with language that provides the seller flexibility with the time frame. The duration of your listing will be discussed when deciding whether to hire an agent to list your property, or which agents to interview if using multiple agents.
What’s listed on the Multiple Listing Service (MLS)?
The MLS is a private site in which listings are published. Typically, only members of these private sites, such as your real estate agent, can directly access your home listing. However, access to these sites are sometimes shared with other related industry members such as lenders and appraisers . The purpose of the MLS is to give exposure to all agents who have buyers looking for a home.
Why would I want my home posted on the MLS?
The MLS allows your home to be marketed to buyers and their agents. This broad exposure will help your home sell faster and at a better price. Most agents belong to a MLS site that covers the part of Florida where your property is located, so their agents will also be able to see your property listing if it is put on the MLS site.
I’ve heard that using a real estate agent will cost me more money. Is this true?
The short answer is no. It is true that agents will receive a commission from the sale of your home, but keep in mind, it is in their best interests to get your property sold at the highest price that is reasonable. This is how they make a living and you must do what is best for you and what you are most comfortable doing.
Do I have to pay closing costs if I have a listing agreement?
Yes. Closing costs are not related specifically to a listing agreement and by contract you agreed to pay these costs regardless of whether you have a listing agreement. Closing costs generally include a Title Insurance policy and a closing fee to the title company. There is no out-of-pocket expense to you if you have a lender, as they will deduct the closing costs from the proceeds of your sale.