So you want to put your Indianapolis home on the market but you don’t know where to start? Because you will be competing with many other Indianapolis homes for sale, the first thing you may want to do is hire a professional Indianapolis REALTOR® to list your home for you on the Brokers Listing Cooperative (BLC), which is a listing service exclusive to brokers in the surrounding Indianapolis real estate market. Working with an Indianapolis REALTOR® will ensure that your home gets the exposure you need across Central Indiana, but when signing listing agreements, what should you know?
First, no matter how well you know or trust the Indianapolis real estate agent you work with, the listing agreement is still a legal contract which should be reviewed thoroughly. Make sure you understand its terms and ask questions about what isn’t familiar.
Not all listing agreements are alike and can be negotiated, just like any other contract. Don’t hesitate to contact your attorney to review it as well. Because it is a contract that can be negotiated, go over all the written language on the form and not just where the blanks need to be filled in by you and your REALTOR®.
Your REALTOR®, unless they are the principal broker themselves, will work under a broker. One area of negotiation is defining the type of relationship you as a seller will have with this listing broker. Usually there are three kinds of listing agreements you choose from: exclusive right to sell, exclusive agency or an open listing.
With an exclusive right to sell listing, the listing broker has exclusive rights to represent the property for sale. This is the typical option sellers choose when listing a property. Under this option, the listing broker gets paid a commission when your house sells during your contract, whether they found the buyer or not. The commission is typically a pre-negotiated percentage of the selling price.
Less commonly used is the exclusive agency option. This option is similar in that the listing broker again can be the only broker you use to list your property and when your Indianapolis home sells, they receive a commission. However, the difference is that if you, as the seller, locate a buyer and close the transaction, you don’t owe your broker a commission.
In an open listing (or non-exclusive listing), a seller can use several brokers to list their Indianapolis home and the broker who secures the buyer for the home is the one who gets the commission. This kind of listing though is hardly ever utilized in residential transactions.
When determining the amount of commission to pay to your broker, understand that this worked out between you and your broker through conversations with your REALTOR®. You may hear that a standard percentage is common and expected but this is not true. Of course, your broker may not be willing to negotiate, but you should know that you have that right.
The commission also does not always have to be a percentage of the final selling price. Other options could be based on the final negotiated price of your home or the amount of time it took to sell, etc.
Before signing on the dotted line, you should know what the listing brokers duties are as well. Make sure you understand what their responsibilities are and that you’re happy with what they say they are going to do to sell your home. Also of importance, make sure they will present all offers to you that they receive for your home and that they agree to hold you harmless for a breach of contract that occurs not of your fault.