Listing Agreements 101: What is It & How Do They Work?

Listing Agreement
  • Author: Fazal Umer
  • Posted On: May 4, 2023
  • Updated On: September 6, 2023

Interested in selling your home?

If so, you’re not alone. You might be among those millions of people who sell their homes. Despite the huge number of sellers, a house sale requires time and effort, and sometimes despite your best efforts, the final price may not be what you expected.  This is where MLS listings agreements are helpful.

You have to cover a lot of ground like negotiating the home price, marketing it to get more potential buyers, and providing the right information. And if you do not pay enough attention to any of these factors, you may just end up losing a good deal. This is where a real estate agent and listing agreement come in! A real estate agent will guide you through the ins and outs of the real estate market, to help you navigate the process and end up with successful negotiations smoothly and efficiently. 

They’ll start by working with you to create a detailed listing of your home like its size, number of bedrooms and bathrooms, and so on. They’ll also take professional photos of your home to make it look its best. 

Next comes a listing agreement. Let’s take a detailed look at it below:

What is a Listing Agreement?

When a seller gives exclusive rights to a real estate agent to sell their property, the contract is known as a listing agreement. 

 In exchange for this right, the agent agrees to market the property and negotiate on the seller’s behalf.

Listing agreements have three types:

  • Open listing:  The seller has the right to list your property with multiple agents. The agent with the first buyers receives the commission.
  • Exclusive agency listing: The seller has the right to list their property but only with one agent, however, the seller is still free to sell the property themselves. The agent receives the commission if they find a buyer, but the seller doesn’t have to pay them if they sell the property themselves.
  • Exclusive right to sell listing:  The agent has the right to sell the seller’s property.  The seller cannot sell the property themselves without paying the agent a commission.

How Does Listing Agreement Work?

After a seller has signed the listing agreement, real estate agents are obliged to the following responsibilities: 

  • Market the property to potential buyers. This may include listing the property on the MLS, putting up signs, and showing the property to buyers.
  • Negotiate on the seller’s behalf. This includes countering offers, negotiating the terms of the sale, and coordinating the closing.
  • Disclose any material facts about the property to potential buyers. It can be any known defects or problems within the property.

While a seller is supposed to do the following:

  • Provide all necessary information about the property. This includes the property’s address, listing price, and any known defects or problems.
  • Cooperate with the agent in marketing and selling the property. This may include showing the property to buyers and signing any necessary paperwork.
  • An agent is paid a commission after a property gets sold. The commission is typically a percentage of the sale price.

What are the Benefits of Listing Agreements?

Listing a property with a real estate agent has its advantages for the seller. For example, agents have access to a wider network of potential buyers than most sellers do. They also have the experience and knowledge necessary to market and sell a property quickly and for top dollar.

Furthermore, agents can help you avoid common mistakes that sellers often make, such as pricing your property too high or not disclosing important information to potential buyers.

What are the Drawbacks of Listing Agreements?

The main drawback of listing agreements is that they can be expensive. The commission that agents charge is typically a percentage of the sale price, which can be a significant amount of money.

 Sellers who sign listing agreements are giving up some control over the sale of their property. For example, the agent may choose to show the property to buyers who the seller would not have chosen firsthand. 

How to Choose the Right Listing Agreement?

the first thing you need to do is to hire a real estate agent, someone that you trust completely. you have to follow their guidelines to get a sweet deal. 

They will help you understand how the listing agreement works, and what they can expect from a house listing. 


A crucial step in the real estate transaction is the listing agreement. Learn about the listing agreements by doing your own research so that you know what you are getting yourself into.  Consult a real estate agent if you have any queries concerning listing agreements. They can assist you in comprehending the various listing agreement sorts and picking the best one for your needs.

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Author: Fazal Umer

Fazal is a dedicated industry expert in the field of civil engineering. As an Editor at ConstructionHow, he leverages his experience as a civil engineer to enrich the readers looking to learn a thing or two in detail in the respective field. Over the years he has provided written verdicts to publications and exhibited a deep-seated value in providing informative pieces on infrastructure, construction, and design.