Realtor Sander Scott walks through what's actually in a listing agreement: commission rates, how long you're locked in, what happens if you get multiple offers, and fair housing rules around buyer letters. He explains his Easy Exit Guarantee addendum that lets you cancel before an offer comes in.
Chapters
Okay, so wanted to show you a little bit about the listing agreement. This would be an agreement that you would enter into with an agent when you're looking to sell your home. So the agreement is actually between you and the brokerage acting through the realtor or real estate agent. So this is an example of my brokerage. I happen to— if you deal with me, by the way, you're dealing with Sander Scott Realtor and also Sander Scott Broker Owner of Net Real Estate. All right, so we would identify the property through the street address, the legal description, and then we come down here to how long the listing agreement is set to take place. So this is something that a lot of times, and, and I totally appreciate it, that my seller is a little concerned about being handcuffed to me for a really long period of time. And yet what they don't understand is that if, if the home is on, if we only list for like, let's say a month and it takes 2 months, which is rare in today's market, by the way, if the house is priced right. But anyway, then we just have to keep doing paperwork all the time. So it's always my suggestion that we make this a long period of time, but I provide the seller with peace of mind in what I'll show you at the end of the video, which is called an easy exit guarantee. So that I never want any of my seller clients to feel like they're imprisoned by this listing agreement, that they— what I always playfully say to my potential sellers is that if I fall and hit my head and I become the worst realtor in the world, you should not be imprisoned by that. You ought to be able to break free and go to another agent who's going to more effectively represent you and see through the sale of your home. So we use these two things in concert. Let's just not have to go through relistings. We can just make this a longer period of time with the idea that with an easy exit guarantee at any time, just putting something in writing can get you out of the listing agreement. Okay. All right. Then the price and term. So what you'll be listing your home at. Goes here. So if you're listing it for $500,000, then we put that there. Okay, if this is where you put your commission, okay, and this is separate, by the way, this goes to the core of the issue that you may have seen publicized recently, the lawsuit with certain big, big brokerages and with the National Association of Realtors, is that sellers were claiming, or at least a part of that class action lawsuit, that sellers were saying that they were not aware that they were paying the buyer's agent's commission. Well, my listing agreement makes that pretty clear here because it talks about the compensation right here for the listing agent, and then down here under cooperation, we're talking about you knowing full well as a seller that you're offering— you're agreeing to offer X amount of commission to a buyer's agent. So that therefore there's eyes wide open on this, that you know that some of what you're paying, the total commission that you're paying, would go to— has a possibility of, of going to the buyer's agent or being shared with a buyer's agent. In between that is this, this idea of additional offers, and this is a paragraph that is basically saying, hey, once you go under contract— by the way, this is often some of my more new sellers don't fully understand that once you go under contract as a seller, especially sellers have very, very few options to break that contract, whereas buyers have more opportunities, more contingencies usually built right into the buy-sell agreement or purchase agreement to be able to break free of the deal. So they have like an inspection contingency. If they find some defects during the inspections, they can use those defects as a way to break free from the contract and get their earnest money deposit back. They may also run into issues with qualifying for financing. That's usually a contingency, whereas sellers really don't have a whole lot of opportunity unless you're in a very unique situation that you've built in a contingency that said that you need to find suitable housing at another location. We're seeing that more and more in this crazy market. I'm putting my house up for sale under the contingency that I have to find suitable housing somewhere else. But usually what happens is, is once you sign as a seller, you're, you're locked into that contract. And if somebody comes in and offers you $25,000 more and you're experiencing a little regret that you wish you hadn't signed this earlier one Well, you can't just break from that and go with the offer that's $25,000 more. So the, the reason that this is in here is that once you sign, it's saying, should we withhold that new offer from you so that you don't experience that regret? I never am an advocate, or I'm rarely— there is one exception down at the bottom of this under buyer letters, right here under buyer letters, that, that I do think it's it's possibly wise for me to withhold information from my clients. But in general, I don't like to do that. I don't like to withhold information. I think it's better that you know, both in the short term and the long term, that a better offer did come in later. That rarely happens, but if it does, you should know about it. So I mark this— I usually recommend that we mark disagree here because the way that that's written, I would always like to share those additional offers. Okay. All right. We already talked about the cooperation, uh, the lead-based paint disclosure form. That's a whole separate form. Let's go down here to buyer letters. Another thing has become really, really popular for a tool for buyers to try to really touch the heart of the seller in some ways. With some sellers, it absolutely doesn't matter. It's just gonna come down to price and terms of the agreement. Some sellers though really enjoy reading buyer— they're called buyer love letters or seller love letters— letters from buyers to sellers talking about their family, their— why they really love the property, how they'll treat the property going into the future, those kinds of things. And this is where I recommend to my sellers not to receive those letters, and here's why. That you really are opening your— you're technically— I, I think it would be a very, very rare circumstance, but those rare circumstances can cause you a lot of headaches and heartaches if they do come up. And that is that you're, you're kind of opening yourself up for a violation of the federal or state fair housing laws. So for example, if you had multiple interested buyers, one of them writes you a love letter telling you in great detail about their family and why they love the property, etc., etc. And then two other buyers, let's say, don't. But they learn— you— they learn later that this buyer gave you a love letter. They could make a claim of possible claim of discrimination. So if you don't receive any letters, it just keeps you a little bit more in the clear. Now, I've had sellers who they just really, really wanted to review those letters and they enjoyed reading them, and that's fine. But my recommendation to my sellers is always to, to have me withhold those from them, and that protects them against that possible future claim of a violation of the federal, state, and fair housing laws. And we as Realtors, we can kind of get what's called a curse of knowledge around federal and state fair housing laws because it's a requirement for our continuing application. And it is kind of a big deal that you do not, as a seller, ever really want to be accused of discriminating based on the protected class. You just don't really want to be in that position as a seller to be perceived as having discriminated based on one of those protected classes under the state or federal Fair Housing Act. Okay, so the next part of this listing agreement— again, this, this agreement is not public It is not put on the MLS. It is not shared in the associated docs. This is just a good— it's an agreement between the broker and the client, but it's also a good communication tool. So this right here, we're, we're talking about what fixtures and equipment is going to be included in the sale and what is not going to be included in the sale. Okay. And then it comes down here. Are you going to be giving a home warranty? Or not. And I did— I, I'm not a big home warranty guy. I kind of view those a little bit like an extended warranty on electronics. I never sign up for them. But there are certain circumstances where a home warranty may make sense. It may make sense for you as a seller to provide that to a buyer under certain circumstances. But as a general rule, I, I stay away from recommending home warranties as, again, as a general rule. Okay, and then there's a lot of other things in this listing agreement that I'm not going to take the time to read through right now. Just one thing that has come up quite a few times with potential sellers is whether they have cameras and the ability to listen to— what we don't ever want, and this could get you in a lot of trouble as a seller, if you had video surveillance and you were listening in on the conversations buyers are having with their buyer's agent while they're viewing your home. That is problematic. And, and so that's why that's in this listing agreement— would highly discourage sellers from doing that if you do have that kind of surveillance in your— the ability to do that in your— on your property. Okay, so that's a little bit about listing agreements. I do want to also take a minute and show you Easy Exit Guarantee. Okay, so showed you the large long-form listing agreement. I alluded to the Easy Exit Guarantee, and this is a supplement to, or sort of an addendum, an addition to that long-form listing agreement. And it basically is saying that either party can cancel the listing agreement for any reason prior to the presentation of an offer upon written note. This. So prior to getting an offer on the property— and the reason it's written that prior to getting an offer is that it really protects realtors and brokerages from sellers just using you to bring in offers and then canceling the agreement and just seeing the name of the potential buyer and going directly with them. There have been a few nefarious sellers over the course of— that have mistreated agents or brokerages in that manner, and so that's why there's some protection for the realtor to know that they'll be compensated for their time and energy and all the marketing expense that they've gone to to prepare the property for sale and market it extremely, extremely well. So anyway, that's why we both parties sign this. There should actually be— I always put an extra signature line for me and we both sign it. And there was a time where I broke a listing agreement, as so That's why either party can do it. I entered into a listing agreement with a divorcing couple on a property out near Interlaken and had the impression when we first began our relationship together that both the husband and wife were, even though they were divorcing, they were both in agreement about selling the property. Later discovered that the husband in that case hadn't been really totally honest about that. And was actually engaging in pretty destructive efforts, would remain on the property during showings, and for lack of a better way to describe it, kind of give the evil eye to buyers and buyers' agents who were showing the property, and was, was really actively thwarting the sale of the property in any way that he could. And so I just, I just went back and said, I need to break this listing agreement because I cannot in good in good faith continue to market this property for sale when you as a seller are actively trying to sabotage its sale. So that's why it's written for both parties. Um, obviously the great, great majority of my sellers who sign up with me to list their property actually want to sell it, so that's not a big deal. But I did want to explain, a lot of times in these legal documents everything's written in there because of the few exceptions that always seem to become the problem areas. And that's why you've got to write the stuff in legal documents to protect against those few, you know, the bad apple spoils the bunch type of a thing. So, so anyway, and that's what you'll find in real estate transactions, it's just more and more legal forms seem to crop up. And that's just because more— as new problems exist, a new legal form is created to try to satisfy that particular issue. And next thing you know, you got— you have a lot of documents. So, okay, so there's a little bit on the listing agreements and then the easy exit guarantee that I use to help protect my sellers from feeling like they're handcuffed to me or that they're somehow a prisoner to this long listing agreement should something happen. As I said earlier, if I fall and hit my head and turn into the worst realtor in the world, then I want my sellers to be able to break free and be able to be served properly if I become unable to do that. Or just in general, I never want a seller who feels like for whatever reason we're not getting along or they're just not happy with how I've done things, then I, I understand that. And it's a free country, right? So, all right, there you go. Thanks a lot. I'm Sander Scott. Yo! Full Service Realtor. We'll see you on the other side.
