Listing and Advertising

Listing Agreement

You’ve decided that you’re going to sell your property, be it a house, cottage, condo, or tract of land – so now, what do you have to do?  The first key thing that the majority of prospective sellers is to call a real estate agent to assist them in the sale of their property.  As a seller, you’re probably be talking to a listing real estate agent (also known as a seller’s real estate agent), where you will work together under the terms of what is known as a listing agreement.  A listing agreement is a legally binding contract that sets out the terms and conditions of the seller and real estate agent’s role in selling a house. 

There are three primary types of listing agreements: (i) Exclusive Right to Sell, (ii) Exclusive Agency, and (iii) Open. 

Exclusive Right to Sell – is the most common type of listing agreement since it protects the real estate company’s investment.  Here the listing agent is entitled to a commission no matter who sells the property - including you.  If another agent brings a buyer, you still only owe a commission to your agent, who will split it with the agent who brought the buyer. 

Exclusive Agency – in this listing agreement you don't have to pay a commission to the listing agent if you find a buyer yourself (basically, you're competing with your agent).  You might want to use this kind of agreement if you already have a good prospect or two before you list your house.  It generally isn't worthwhile for a listing agent to sign an Exclusive Agency agreement because they may end out losing out if you find a buyer yourself, which means wasted marketing efforts on the agent’s part.   

Open – with this listing agreement, you agree to pay a commission to any agent as long as that agent is the first to produce an acceptable buyer.  You will not owe a commission if you find a buyer.  Many real estate agencies will sign an Open Listing, but don't expect any type of marketing from them.  If they have a buyer they think might be interested, they'll show it, but they won't spend time and money to push a property that's listed by multiple agencies.

Always remember that a listing agreement is a binding legal contract that shouldn't be taken lightly.  It is paramount importance to carefully read over the contract and understanding what it means before you sign it.  If you need legal advice, it would be wise to consult an appropriate attorney.

Listing contracts can vary quite considerably from one company to another, and from state to state.  However, most listing agents use established listing agreement forms that are the industry standard in their area, or are dictated by their brokerage company. Everything on these preprinted forms is negotiable.  Here are some basic terms to consider when negotiating your listing agreement:

Length of Contract – This should be largely dictated by how hot the real estate market is at that particular time.  In a weak market, a longer agreement may be beneficial since it gives the agent more time to find a buyer for your home.  In a market where properties are selling quickly, you don't want to be committed to one agent for more than a few months.  If you’re satisfied by your agent’s efforts but the property doesn't sell within the initial period, you can offer to extend the term of the agreement before it expires.

Agent’s Commission - Although commissions are negotiable, most areas will have a standard percentage that agents expect to receive.  Usually this amount is 6-percent of the sale price.  However, you may find agents who accept 5-percent and other agents who ask for 7-percent.  Whether you want to pay the percentage that's typical in your area or negotiate a lower rate is up to you.  A lower commission will save you money. A higher commission will give the agent more incentive to invest in marketing your home.  The agent's commission typically isn’t renegotiated as part of the purchase agreement between the seller and the buyer, but some agents may give a little to close a price gap between the seller and buyer, consequently making the transaction more viable.

Multiple Listing Service (MLS) – by signing a listing agreement, it authorizes your agent to post your home in the Multiple Listing Service (MLS).  Unless you're selling a very exclusive property or have serious personal privacy concerns, the MLS is a very important selling tool since it reaches the widest audience of prospective buyers.  Today, most MLS databases are accessible by consumers on the Internet. 

Lockbox - a lockbox is key-holding safe that can be inconspicuously attached to the front of your property.  This allows greater accessibility to your property to prospective buyers even if you, or your agent, are not present.  If you're concerned about strangers entering your property alone, don't authorize a lockbox.  If your property is vacant, located in a low-crime area, or if you've removed your valuables and are willing to take the risk, a lockbox might be reasonable.  Having a lockbox may potentially increase the likelihood of a sale since more people will see the property at their own discretion.

Marketing and Advertising Your Property 

Your real estate agent’s or yourself will probably embark on some rigorous marketing efforts to sell your home as quickly as possible.  Some considerations that will influence the marketing efforts are advertising, showing the property, how long the house has been on the market, and whether you're buying another home.

Forms of Advertising – advertising is one of the key components in getting a house sold.  If you have enlisted the services of a certified real estate agent then your property should be listed on the Multiple Listing Service (MLS).  The MLS is the single most powerful marketing tool the agent has because of it will reach the largest audience of potential buyers.  The website, www.REALTOR.com has the largest online MLS database of properties.  It is well established that almost all prospective buyers will investigate available properties online.  Not limited to the online MLS database, there is a multitude of internet home search/listing services that allows the prospective buyer to view other properties that may not be listed to the MLS.  A popular real estate website to view such listings is www.everythingre.com.  

Whether you have hired a realtor or are selling via For Sale By Owner (FSBO), you will most likely advertise in traditional media outlets (local newspapers, real estate catalogues, and maybe even radio and television promotions), to supplement your on-line advertising.  Even with all these additional advertising avenues, a simple "For Sale" sign on the front lawn is still a remarkably effective advertising method.  Many real estate agents will also include brochure boxes along with these signs to market the property.   When appropriate, and with your permission, your agent may send a mailing about your property to surrounding neighbors.  Sometimes one of them has a friend or relative who always wants to live close by.

Open House - Having an open house is another great and traditional way to get people interested in purchasing your property.  Prospective buyers may become more serious about buying once they view the property to get a more intimate knowledge of it.  To organize an open house, you should make sure you’re available at the time (FSBO) or your real estate agent is present.  If you have a real estate agent, they may tactfully request that you not be present, since it may inhibit prospective buyers to not fully investigate the property fully.  You may want to notify the neighbors, and assure them that they'll be welcome.  You will be surprised at how interested they will be to view their neighbor’s home, and sometimes they can turn up a buyer among their friends.  In preparing for an open house, you should:

- Ensure optimal lighting.  You want the mood to be light, cheerful, and serene.  Make sure you have replaced any broken bulbs, and always make sure that the kitchen and bathrooms are brightly lit.  Pull the curtains or drapes back to exhibit the amount of natural light the property gets.  It might even be nice to light your fireplace should you have one.   

- Clean the property!  This seems logical, but it doesn’t mean that it is always done – you would be surprised.  A cluttered or dirty house will inevitably turn many prospective buyers off.  

- Keep your home in show condition at all times because you never know when an agent will want to drop by with a client.  Improve the look and feel of your home with fresh flowers, soft music and clean walkways and street curbs.  You may even want to simmer a few drops of vanilla on the stove to create a sweet and inviting aroma.   

- Subtle actions like setting the dining room or kitchen table with nice linen and dishware, placing fresh towels in the bathroom, arranging wall decorations, putting flowers out will increase the aesthetic feel of your property.  This sets an appealing tone for prospective buyers. 

- If you have kids or pets, arrange for them not to be there. 

- Prepare a fact sheet about your property for viewers.  Facts included should include price, square footage, floor-by-floor listing of rooms, dimensions of major rooms, tax bills, utilities, broker's name, phone numbers to call, and an exterior photo of the home. 

- Place signs on items that will not be sold with the property, such as washers, dryers or dining room fixtures, etc.