When you decide to sell your Florida home or condo (or other residential real estate), one of the first steps you may take is finding a real estate broker to help you get the property sold. In the Miami and Broward County areas, there are lots of real estate agents working hard for local, state-wide, and national brokerage firms to get condos, single family homes, townhouses, and more sold for residential sellers.
When a residential seller here in Florida finds a real estate broker that he or she wants to hire, then that broker is going to want the seller to sign a contract which is known in the industry as a “listing agreement.” This is a legal document and it will bind the seller to legal duties — but all too often, Florida home sellers don’t realize that there are different kinds of listing agreements and that once they’ve signed one of these agreements, they may be bound to terms that they later find to be unfair.
For instance, sellers may work hard to find their own buyer for their Miami condo or Fort Lauderdale house only to find that under the listing agreement, the real estate broker may still be due money under the contract even though no real estate agent working for that brokerage firm did a thing to find that buyer.
There are four basic types of contracts between sellers of residential real estate here in Florida and real estate brokers / agents: the open listing; the exclusive agency; the exclusive right of sale; and the net listing.
In a open listing agreement, the real estate broker (working through its agents) can bring potential buyers to check out your property and if that potential buyer ends up closing the deal, then that broker gets paid a commission for finding that buyer. The Florida seller can sign as many different open listing agreements with as many different real estate brokers as he or she chooses to execute.
Thing is, Florida real estate professionals don’t like competing with each other in these kinds of situations, so the seller may find it difficult to gather a lot of signed open listing agreements and the property may not get promoted as much by the real estate pros as it would under other arrangements.
In an exclusive agency agreement with a Florida real estate broker, the seller is free to find his or her own buyer and if the seller succeeds the broker gets paid nothing. However, if the real estate broker finds the buyer, then the broker (working through its agents) will get paid the real estate sales commission as detailed in the listing agreement.
In an exclusive right of sale listing agreement, the real estate broker gets a commission when the home is sold no matter who finds the buyer. If you find the buyer, then the real estate broker still gets paid the commission that is described in the listing agreement.
In a net listing agreement, there’s more wiggle room for the real estate broker profit-wise. Here, the agreement allows for the residential real estate to be sold with a specific amount (the “net amount”) to be paid to the seller and the real estate broker is authorized under the listing agreement to keep all the money from the sale that exceeds that net amount. In some circumstances, that sum may be much higher than the standard commission percentage the real estate broker would receive.
The Multiple Listing Service (MLS) is a real estate tool used across the country to help market and sell real estate. Each entry into the MLS is given a specific identification number and real estate professionals are able to search through MLS listings in a national database using different criteria (location, sales price, number of bedrooms, number of days on the market, etc.).
MLS involves real estate brokers agreeing to participate in the Multiple Listing Service and forwarding information about their exclusive listings (see above) for inclusion in the MLS database. Any MLS member can work to sell property in the database and if a real estate broker other than the one who signed the exclusive listing agreement finds the buyer, then that broker and the broker shown on the listing agreement split the commission.
Sellers do not contract for listing agreements in MLS. The Multiple Listing Service is made up of real estate professionals as its members. Additionally, not every real estate professional in Florida may participate in MLS and not every piece of residential real estate will be included in MLS databases for Florida homes for sale.
Listing agreements are legally binding contracts between you and the real estate broker. Many of these real estate professionals will be forceful in getting a contract signed but remember that they are NOT LAWYERS and they are NOT CONTRACTING WITH YOU FOR YOUR BEST INTERESTS, BUT FOR THEIR OWN SALES REVENUE GOAL.
Questions for sellers to consider before signing any listing agreement including things like:
Before you agree to any kind of listing agreement as a seller of a Florida condo, townhouse, single family home, or other residential real estate, it’s important for you to read and understand all the provisions in that legal contract and to know your legal options before you sign on the bottom line. Getting the advice and guidance of a Florida real estate lawyer can be invaluable here and much less expensive than many sellers presume. Most often, your real estate lawyer will review this Agreement as part of their services in representing you in the sale of your home.
A good piece of advice when you and your family are purchasing or selling your family home in one of the biggest transactions of your life is to at least talk with a Florida real estate lawyer. Getting someone to review all of the paperwork isn’t as costly as most of us think it is. And it’s always a lot cheaper than paying to fix a problem after a closing occurs. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.
_______________Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.
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