You’ve thought it out, and now, at last, you’re ready to sell your home. If you’re like the vast majority of sellers in NYC, you’ll be hiring a listing agent to help with the sale. The benefits of having a good agent are well established, and if you’re in a hurry to sell, they can more than pay for themselves. Once you’ve met and interviewed prospective brokers and found one you’re happy with it’s time to sign the exclusive listing agreement. This is a relatively straightforward procedure, but it helps to understand what goes into one. Here’s what you need to know about exclusive listing agreements with NYC brokers.
What is a listing agreement?
A listing agreement is a contract between a seller and a real estate agent (listing agent) that says the agent has the right to list your house. These contracts are good for the agent, as it obligates you to work with them for a set time. It’s also good for the seller because it sets out the responsibilities of the agent and what you can do if they don’t meet them. It’s essential that you understand the terms of the agreement as you’ll be bound legally by them.
Usually a page or two long, these contracts are typically written in straightforward language. Brokerage firms generally have their in-house form that individual agents adapt as necessary. Keep in mind that you can have some terms changed or added if you’re not happy with something.
What goes into a listing agreement?
It’s essential that you read the contract carefully. If something seems a bit vague, ask the agent for clarification. Although it’s uncommon to have an attorney look over the listing agreement, it certainly wouldn’t hurt. These are the most important things that you’ll see in any listing agreement.
- The Commission – this is the amount you’ll pay the agent. The standard amount in NYC is 6% of the selling price, but you may be able to negotiate a lower rate if you have a previous relationship with the broker or have multiple properties to sell.
- Exclusive right to sell – this gives exclusive rights to the agent to list, market and sell your home for the duration of the agreement.
- Duration – the contract will specify when it starts and ends. This is usually for six months, but three-month agreements are not uncommon. Three to six months should be fine, but if it hasn’t been sold by then, it could signal that something may be wrong. If so then you can always reevaluate the price or marketing.
- Safety and protection clauses – while the contract will have an expiration date it’s likely it’ll also include a provision to protect the broker after that date. This prevents a seller from holding back on a buyer until the agreement expires to avoid paying the commission.
- Duties – the exact responsibilities of the agent will usually be spelled out. This is worth looking closely at. If there’s something you disagree with or would like added, you can always negotiate changes.
- Representations – you may also be required to verify your legal position to sell the property.
- Dispute Resolution – the contract will state how any disputes will be handled should they occur. For instance, through mediation or binding aberration.
There are several other things that the listing agreement may state, such as the marketing plan and whether or not co-brokering is allowed, but this is the bare bones of most contracts. One other thing you’ll likely find in NYC contracts is a particular notice on lead-based paint. Any property built before 1978 is legally obliged to disclose to the buyer any information on its presence.
Don’t sign until you’ve read everything and also don’t be afraid to ask for amendments if you’re uncomfortable with something. Listing agreements are very straightforward but as with anything that you’re being asked to sign you should always read through it carefully.
Exclusive Listing Agreement Sample
Address: 555 Park Avenue, New York, NY 10055
Re: Listing Agreement for 555 Park Avenue, New York, NY 10055
Dear Mr & Mrs. Smith
Thank you for choosing ACME Residential to market your apartment. We have already discussed the various steps to be taken to bring you as many well-qualified customers as possible, and I assure you that I am committed to getting you the best possible price in the shortest possible time.
The following reflects the agreement between us. If this meets with your approval, please sign and return the enclosed copy.
You have employed ACME Residential as a real estate broker with exclusive right to sell the above-captioned apartment. You represent that Mr & Mrs. Smith, Inc., the owner of the above property.
This agreement shall be valid as of August 20, 2018. It shall continue in full force and effect until November 20, 2018.
ACME Residential is authorized to offer the apartment for sale at a price of $1,000,000 and to represent that the common charges of the apartment are currently $1,000 per month, and the property tax is $900 per month.
ACME Residential is authorized to solicit the cooperation of other licensed real estate brokers who will act as agents for the prospective purchasers and to work with them on a cooperating basis for the sale of the above apartment. If the apartment is sold pursuant to this agreement, whether to a Purchaser or to the Board of Managers who has exercised its right of first refusal, including a sale to the Lessee whether during the term of this agreement of afterward, ACME Residential ’s fee for service to be paid by you shall be five (5%) percent of the total sale price of the apartment. In the event another licensed real estate broker solicited by us is involved in this transaction, ACME Residential shall pay the cooperating broker a fee for service by separate agreement with such broker and in no such event shall the fee for service paid by you exceed five (5%) percent of the selling price.
During the term of this exclusive right, you agree to refer to ACME Residential all inquiries, proposals and offers received by you regarding the apartment, including, but not limited to those from principals and other brokers, and you agree to conduct all negotiations with respect to the sale or other disposition of the apartment solely and exclusively through ACME Residential.
Within three (3) business days after the expiration of the listing term, we shall deliver to you in writing a list of no more than six (6) names of persons who inspected the premises during the listing term. If within three (3) months after the expiration of the listing term a contract is signed to sell the premises to a person on the said list, we shall be entitled to the service fee paid by you which will equal to and in no event shall exceed either: a. Five (5%) percent of the selling price when the purchaser is represented by an outside cooperating broker; or b. Three (3%) percent of the selling price when the buyer presented is a direct client of ACME Residential.
If any settlement monies due to buyer’s default on a fully executed contract with all contingencies fulfilled is received by you, ACME Residential will be entitled to 10% of said monies. In the situations, when the property subsequently gets sold to another buyer from the said list within three (3) months after the contract expires, ACME Residential shall apply received 10% of the settlement monies toward the amount of the service fee paid by you, which should be equal to but in no event exceeding five (5%) of the selling price for non-direct sale, or three (3%) percent of the selling price for direct sale.
ACME Residential represents you, the Seller, on ACME’s exclusives.
Special Lead Paint Notification:
If your property was built before 1978, you have an obligation to disclose to the Purchaser and the Purchaser’s agent all information known to you regarding the presence of lead-based paint and lead-based paint hazards within this target housing. All information known to the Seller’s agent regarding the presence of lead-based paint and lead-based paint hazards within this target housing will be disclosed to the Purchaser. Federal laws require that the Purchaser is given a 10-calendar day period (unless otherwise agreed in writing) to conduct a risk assessment or inspection for the presence of lead-based paint before becoming obligated under the Contract of Sale to purchase the target housing.
Fair Housing Notification:
ACME Residential is committed to upholding the city, state and federal Fair Housing requirements prohibiting discrimination.
This agreement shall bind and benefit the personal representatives, successors or assigns of the parties.
Facsimile signatures shall be construed and considered original signatures for purposes of enforcement of the terms of this Agreement. Same may be executed in counterparts and taken together shall constitute the whole of this Agreement. This agreement may not be changed, rescinded, or modified except in writing, signed by both of us.
Agreed and Accepted by the Property Owner____________________