What is Listing Agreement Drafting?
A listing agreement is a legal contract between a property owner and a real estate broker. It serves to give the broker authority to market and sell the specific property.
To ensure clarity and prevent disputes, your listing agreement must be professionally and accurately drafted.
Read the rest of this article for key elements to include in a listing agreement, how to draft it, and how a qualified lawyer can help you with the drafting process to protect your interests.
What are Key Elements in a Listing Agreement?
A listing agreement should contain the following core components:
- Parties. Clearly define the property owner and the broker involved in the arrangement.
- Listing price. State the asking price for the property.
- Duration. Explain the timeframe for the agreement, which tends to be between 90 and 180 days.
- Commission. Explain how the real estate agent or broker will be paid.
- Duties. Outline what both parties will do, such as that the agent will fulfill marketing activities.
- Holdover period. Explain what happens after the contract is terminated and how the broker will receive outstanding commission.
What are Tips for Drafting a Listing Agreement?
When drafting a listing agreement, you want to provide essential tips that will protect both parties’ interests.
Verify the Property Ownership
Make sure that you confirm the legal ownership of the property so that there’s no ambiguity. Confirm that the person signing the agreement has the legal authority to act for the owner. You should also provide identifying details about the property.
Explain the Payment Terms
You want to specify all aspects of the payments involved in the agreement, such as the asking price, commission percentage, and how commission is payable. Consider what happens if the transaction doesn’t go through, such as if the buyer defaults.
Outline Marketing Activities
You should explain what the agency is allowed to do when marketing and advertising the property, such as placing signboards, advertising online, and conducting property viewings. Make sure you have the permission required for taking photographs and providing property access.
Consider the Listing Agreement Type
There are various types of listing agreements, such as an exclusive right to sell or open listing. Define exclusivity clearly so that there’s no confusion between parties. For example, in an open listing arrangement, the seller can work with multiple brokers and compensation is provided to the broker who earns it under the agreement.
Explain Offers and Negotiations
Your agreement should specify exactly how offers will be presented and mention that the seller has decision-making authority, as defined by applicable laws.
Address Legal Compliance
When drafting a listing agreement, you should ensure that its terms align with all the relevant state, federal, and local requirements. A lawyer can assist you with this process to maintain compliance.
Do You Need a Lawyer to Draft Your Listing Agreement?
If you’re unsure of how to navigate drafting a listing agreement, you should hire a lawyer who can help you. Although they’re not always legally required, they’ll give you peace of mind that your interests are being protected.
A lawyer can assist you during the drafting process in various ways, such as by:
- Aligning the agreement with applicable laws. A lawyer will ensure that all its terms match applicable state and local laws and regulations to prevent non compliance.
- Clarifying commission and fees. A lawyer will specify exactly how the brokerage compensation is handled and when it’s payable. This serves to prevent misunderstandings.
- Protecting legal interests. A lawyer will consider potential risks and clarify parties’ obligations.
- Explaining listing arrangements. They’ll explain all the legal implications of different listing arrangements so you settle on the most appropriate one for your situation.
- Establishing clear terms that avoid ambiguity. This will ensure you minimize your risk of disagreements or disputes.
- Considering marketing and disclosure duties. A lawyer will check that the agreement specifies how to handle advertising permissions, marketing activities, and property disclosures.
- Customizing the arrangement. Instead of relying on a generic agreement template, a lawyer will tailor the agreement to your specific property and transaction.
- Reviewing the agreement. If you’ve drafted the listing agreement, a lawyer can provide an in-depth review of it so that you have peace of mind about its terms.
Where to Find a Lawyer for Listing Agreement Drafting
If you need to draft a listing agreement, you don’t have to call traditional law firms in your area or ask people in your networks. You should use an online legal platform that gives you access to a range of lawyers in your area who have contract drafting and review experience.
ContractsCounsel is one of the largest online legal marketplaces that connects you to a curated network of lawyers who have been vetted on the platform. This gives you the confidence to hire a lawyer who’s reputable and experienced.
If you want to ask a lawyer to draft your listing agreement, you should follow these easy steps on the ContractsCounsel platform:
- Go to the ContractsCounsel marketplace.
- Select ‘One-time project’ and ‘Create or update contract.’ If you’d prefer to ask for a legal review of your agreement, choose ‘Contract review’ instead.
- Post your project, which is free to do on the platform. Include some details about what you need so you can match with the most suitable lawyers.
- Wait for bids. You’ll receive multiple bids from lawyers directly on the platform who are ready to assist you.
- Review the platform’s lawyer information. This includes the lawyers’ credentials, years of experience, field of expertise, location, and client ratings for projects completed on the platform.
- Select a lawyer. Based on the research you’ve reviewed, choose to work with a lawyer. They’ll draft your listing agreement for a flat fee.
