Chapter 3The Listing Agreement:How to Secure a Listing

I. Employing an Agent

Employing an Agent

A LISTING is an employment contract between an owner and a licensed real estate broker entered into for the purpose of the broker providing services to find a ready, willing, and able persons to buy

“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

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

A. Right to a Commission

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 principal’s 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 AUTHORIZATION and 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 California 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 SELLER’S 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

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

CHAPTER SUMMARY• Employing An Agent

• Right to a Commission• Types of Listings

• Open Listing• Exclusive Listing• Net Listings• MLS• Buyer’s Listing• Who does the broker

represent?

• Agency Relationships• Single Agency• Dual Agency

Preparing for the Listing Appointment Meeting the Listing Prospect Obtaining the Listing

Closing the Seller Overcoming Objections to

Listing

Servicing the Listing