What Is a Listing Agreement? A Comprehensive Guide for Home Sellers in Silicon Valley

What Is A Listing Agreement? A Basic Guide For Home Sellers

What is a Listing Agreement?

A listing agreement is a legally binding contract between a homeowner and the real estate agent or broker who will be listing the property for sale. The agreement outlines the terms and conditions under which the agent or broker will market and sell the home, lays out a framework of duties and expectations between the seller and the agent, and includes several essential details about the upcoming sale.

Only home sellers need to sign a listing agreement. For potential buyers, they will have to sign a buyer’s agency agreement before an agent will represent them. You’ll only sign the listing agreement after you and the agent have agreed on all the details of the home sale. You can think of it as an employment contract, as you are officially hiring the agent for the job of selling your house. No money should be required upfront when you sign, as agents are paid with commission fees at closing.

The listing agreement is meant to protect both parties. It protects the seller by defining the agent’s responsibilities and what to do if he or she doesn’t meet them, preventing you from being tied to an agent that is not fulfilling their end of the service agreement. Meanwhile, it also ensures that the real estate agent is fairly compensated with a guaranteed commission once they execute a successful home sale.

Types of Listing Agreements

Before we explore the necessary details usually included in a listing agreement, let’s take a look at the most common types of listing agreements. Your agreement type is often listed at the top of the document itself. The terms can also vary based on the area where you live, so it’s a must to read the agreement closely to understand the specific contract you have with your broker or agent.

Exclusive Right-to-Sell Listing Agreement

This is the most common type of listing agreement, and I have written a complete guide to the California Residential Listing Agreement for Bay Area Sellers. As defined by the National Association of REALTORSĀ®, an exclusive right-to-sell listing agreement is a contractual agreement under which the listing broker acts as the agent or as the legally recognized non-agency representative of the seller, and the seller agrees to pay a commission to the listing broker, regardless of whether the property is sold through the efforts of the listing broker, the seller, or anyone else.

To put it simply, you’ll be working exclusively with one agent to sell your house within a definite period of time. The broker is entitled to their commission regardless of who sells the property, as long as the listing agreement is in effect.

Exclusive Agency Listing Agreement

In this type of listing agreement, it’s similar to an exclusive right-to-sell listing where the broker acts as the agent and any agent in the agency may sell the property and collect the commission. But in this case, the seller still reserves the right to sell the home on their own if they choose. And if the property is sold solely through the efforts of the seller, he or she is not obligated to pay a commission to the listing broker.

Open Listing Agreement

This is a non-exclusive agreement that allows the seller to use multiple real estate agents to sell their home, but the agent who sells the home is the only one who gets a commission. If the homeowner succeeds in selling the home themselves, the agents walk away empty-handed, which is why these kinds of agreements are less common and are generally less favored by agents.

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Essential Details Included in a Listing Agreement

Now that we’ve covered the different types of listing agreements, let’s dig deeper into the essential details that are usually included in a listing agreement. Understanding these components will help you navigate the agreement and ensure that you and your agent are on the same page.

Contact Information

The listing agreement will include names, phone numbers, addresses, and other contact information for the seller and the real estate broker or agent. This ensures that both parties can easily communicate throughout the selling process.

Property Description

The listing agreement will provide a complete and accurate description of the property. This includes details about the size, condition, and features of the home. It may also specify any fixtures that will be left behind after the property is sold, and which items will not be included in the sale and you’ll be taking with you when you move.

List Price

You and your agent will discuss the listing price ahead of time, which is based on market data, comparable homes that have sold in the area, and the condition of the home. The price should be written in the agreement to match your earlier discussions.

Agreement Duration

A listing agreement usually covers a duration of between three and six months, although it can last for any amount of time you and your agent agree on. This timeframe gives the agent enough time to market and sell the property effectively.

Agent Duties

The agent’s responsibilities and detailed plan of action will be specified in this section. It outlines the activities the listing agent is authorized to conduct on your behalf, such as holding open houses, listing your home on the MLS, posting a yard sign, and more. Understanding the agent’s responsibilities will give you a clear idea of what they will (and will not) do during the selling process.

Agent Commissions

The commissions, fees, and other compensation need to be added to the agreement. Agent commissions are usually between 5 percent and 6 percent of the proceeds of the sale, and are usually split halfway with the buyer’s agent. This section ensures that both parties are aware of the financial arrangements involved in the transaction.

Mediation and Conflict Resolution Details

This part of the document states how any potential disputes between the property owner and agent will be resolved. It will specify whether conflicts will be settled using mediation or arbitration, lowering the risk of escalating conflict into a legal dispute.

Protection Clause

When the agent shows the house to a potential buyer during the listing agreement period, but that person doesn’t buy the property until after the listing agreement has expired, the protection period clause in the agreement will protect the real estate agent from losing their commission. This clause ensures that the agent is still entitled to their commission if a buyer they introduced purchases the property within a specified timeframe.

Point. Click. Offer. Sell.

Modifying the Listing Agreement

While the listing agreement is legally binding, it may be possible to make changes to it as needed, with the consent of the listing broker. The most common points of negotiation are the listing type, agreement duration, agent duties and commission, and list price, among others. When you make changes to the document, your listing agent will send an addendum highlighting which sections are changed. Both parties will need to sign the addendum for it to be valid. It will then be attached to the original document.

Most commonly, it is the listing agent who wants to modify the terms of the listing agreement – typically, a price reduction or extension of the listing period. Take the time to review the listing agreement to ensure that all provisions of the contract are correct and include things you and your agent agreed on earlier. Also, make sure that you understand all your agent’s obligations to you, as well as your duties and responsibilities as a seller.

Terminating the Listing Agreement

The decision to sell your home is one of the most significant decisions you have to make, both financially and emotionally. The worst-case scenario is that the relationship between you and your agent doesn’t work out. Before signing a listing agreement, make sure you are clear on your rights to get out of it if you need to.

You may want to terminate the listing agreement if you decide that you no longer want to sell your property. Likewise, you may also want to end the agreement if you do not want to work with your agent or broker anymore and they haven’t found a buyer for your home. Most agents will agree to cancel a listing agreement if the client is unhappy, as long as they don’t have an existing buyer yet.

However, be aware that the standard listing agreements used by Bay Area brokerages do not include language which allows the seller to just cancel on their own; cancellation usually requires consent of the broker, too.Ā  This is because the broker may have spent considerable time and money working on thee seller’s behalf and will not want to allow the seller to cancel after making such a significant investment into the project of getting the home sold.

This is why it’s important to choose a top and trusted real estate agent to help you sell your home. Do your research, interview at least three agents before hiring, and review the fine print before signing a listing agreement with them.


Selling a home in Silicon Valley can be a complex process, but understanding the listing agreement is a crucial step in ensuring a smooth transaction. By familiarizing yourself with the types of listing agreements, essential details included in the agreement, and the process of negotiating and terminating the agreement, you can confidently navigate the real estate market and find the right agent to help you sell your property. Remember, choosing the right agent is key to a successful home sale in Silicon Valley.

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About the Author
Seb Frey helps long-time Bay Area homeowners make their next move easily the next one yet. If you're looking for a minimum of hassle, maximum net cash on sale, and certain results, contact Seb today.