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5 Types of Listing Contracts | Real Estate Exam Prep Videos - YouTube
Channel: The Real Estate Classroom
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in this video we're going to discuss
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everything that you need to know for
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your real estate licensing exam
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regarding the listing contract we're
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going to get into what needs to be in a
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listing contract and what are the five
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different types of listing contracts
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that you need to know so you can pass
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your real estate licensing exam all of
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that and more in this video
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[Music]
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everybody my name is Paul Vitesse key
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and welcome to the real estate classroom
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YouTube channel we appreciate you being
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here hey do me a favor if you would just
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give this video a thumbs up hit that
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little red subscribe button and click
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the notification bell and if you know
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anybody that studying for their real
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estate licensing exam I would appreciate
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it if you would share this channel with
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them in this video we're going to
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discuss the listing contract there are
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two questions that I'm gonna answer that
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you need to know for your real estate
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licensing exam number one is what is a
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listing contract or sometimes called a
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listing agreement listing contract and a
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listing agreement can be used
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interchangeably and then we're going to
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talk about the five different types of
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listing contracts all right so let's
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first deal with what is a listing
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contract well the first thing to
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understand the listing contract defines
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the relationship and it defines the
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relationship between the seller and the
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broker or the real estate firm this is
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important because a listing contract is
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a basically an employment contract
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between the listing broker and the
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seller even though it appears that the
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contract is between the seller and the
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listing agent now the listing agent is
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signing on behalf of the listing broker
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and remember when a listing agent shows
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up at a sellers house and they sit down
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at the kitchen table
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it's the listing agent that signs the
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listing contract not the broker and the
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reason that happens is the relationship
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between the listing agent and the
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listing broker is what we call a general
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agency relationship therefore it allows
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the listing agent to actually speak on
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behalf of the listing broker and
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therefore the listing agent is allowed
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to sign on behalf of sign on the listing
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contract on behalf of the listing broker
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we're going to talk more about that in
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the agency video but I just wanted to to
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make sure that you understood that
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concept there the listing contract
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defines the relations
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between the seller and the listing
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broker now the listing does some other
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very very important things that we have
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to know number two it establishes what
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the listing price is how much is this
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property up for sale number three it
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defines what the Commission rate is
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going to be the Commission rate that the
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seller is going to pay the real estate
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broker for services the other thing that
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it's going to do is define the the roles
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and responsibilities what we call RN are
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the roles and responsibilities of the
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real estate broker and all the agents
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that work under that listing broker now
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the listing contract also has a couple
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has to have a couple of other things it
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must have a start date and an end date
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what we call an expiration date an
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expiration date you can't just put in
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for put on the listing contract this is
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for 30 days or 60 days you have to have
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actual dates this starts August 1st 2020
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and it ends October 31st 2020 specific
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dates are required the next thing that
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it has to have is the signatures the
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signatures of all sellers all of them
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not just one
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otta - not a majority anyone that has a
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legal interest or legal ownership in
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that real estate or that piece of real
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property must assign the listing
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contract now if it's if the real
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property is owned by a corporation or an
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LLC or one of those type of things then
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we're going to go to the operating
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agreement or the Articles of
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Incorporation to find out who has
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signature authority or can sign on
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behalf of the other principles within
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that organization it's very common in an
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LLC which is a limited liability company
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it's very common where there might be
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five or six principles but only one of
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the principles has the signature
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Authority now if there's not
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established in those Articles of
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Incorporation Zoar the bylaws or the
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operating agreement depending on which
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state you're in then all of the
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principles for that for that entity must
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sign the listing contract and the last
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thing that it must have is the legal
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description now remember the legal
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description from a previous video is
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what I call the legal address the legal
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address work it's legally described or
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the location is legally described now
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listing contracts can have a bunch of
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other stuff and they do often like the
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postal address if it's not raw land it
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can have things like what type of
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personal property will and won't be
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included in the the sale or the
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transaction or what fixtures are going
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to be included or not included such as
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family heirlooms the chandelier those
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type of things but this is basically the
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minimum of what has to be in a listing
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contract for it to be legally binding
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and enforceable alright the next thing I
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want to talk about are the the types of
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listing contracts that you need to know
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for your real estate licensing exam and
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there are five of them that you need to
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know and I'm gonna discuss the
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differences between all five of them now
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the first one is what we call an
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exclusive right to sell exclusive right
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to sell now under an exclusive right to
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sell listing contract remember it's a
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type of listing contract it simply means
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that the broker the listing broker has
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the exclusive right to represent the
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seller in the transaction therefore no
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matter who procures the buyer then the
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listing broker is going to get paid the
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agreed-upon commission that was listed
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in the listing contract so even if the
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seller does their own open house and
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finds their own buyer then the listing
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broker is still gonna receive the
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Commission the second type I want to
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talk about is what we call
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an exclusive agency agreement or
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exclusive agency contract exclusive
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agency contract looks a lot like the
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exclusive right to sell but there is one
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difference and that is the seller
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reserves the right to procure their own
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buyer all right so it's a partial
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exclusive right to sell so it so the
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seller is able to go out and try to find
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their own buyer if they find their own
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buyer then they don't pay a commission
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but if a buyer is procured by any other
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means then the broker is entitled to the
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agreed-upon commission that was listed
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in that listing contract the third type
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I want to talk about is what's called an
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open listing an open listing an open
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listing simply means that the seller is
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allowed to go out and sign a listing
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contract with as many different brokers
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as they want to and the broker that
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procures the buyer gets paid the
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commission so the seller could literally
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go out and hire five different real
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estate firms to represent them but
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whichever one actually brings the
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purchase contract of the buyer is the
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one that's going to end up getting paid
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should that purchase contract make it
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all the way to closing the other thing
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that an open listing does is it's
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partially an exclusive agency contract
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meaning that the the seller has the
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ability to try to find their own buyer
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and if they do procure their own buyer
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then they don't have to pay a commission
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it's a pretty rare type of listing
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contract but it is utilized mostly where
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I've seen it personally as mostly in the
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more rural areas the fourth type of
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contract I want to talk about is what we
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call a flat fee a flat fee listing over
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the years they've been becoming more and
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more popular and this is where the
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listing broker simply charges X amount
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of dollars to sell your
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property now it's a type of exclusive
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right to sell meaning the the listing
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broker is still going to get paid the
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agreed-upon no matter where the buyer
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comes from but it's at a it's at a flat
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rate so they may charge for example they
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may charge the seller a flat fee of five
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thousand dollars to transact the the
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real estate deal so it's one fee and
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that's all it is so no matter where that
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buyer comes from the listing broker is
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still going to get paid that five
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thousand dollar Commission
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okay now the fifth and final type of
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listing I want to talk about it's what's
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called a net listing a net listing now
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keep in mind that a net listing is not
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legal in every state and in fact the
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last time I checked which would have
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been I think in 2017 so it's been a few
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years ago only like 17 out of the 50
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states actually allowed net listings so
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your state may or may not allow them but
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you need to know them anyways for the
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real estate licensing exam alright so
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what is the net listing well the net
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listing basically says that the seller
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wants a net amount from the sale of
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their property and anything above and
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beyond that net amount is the commission
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for the real estate broker
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now these have to be predetermined at
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the time that the listing contract is
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signed so let me give you an example
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let's say that the seller the seller
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wants a net of $200,000 when it's all
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said and done they want to check at
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closing for $200,000 and let's just say
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that the broker decides well this is
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unique and I want to make at least 10%
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off this deal so if the sellers going to
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get $200,000 then how much more is going
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to have to be charged to cover that 10%
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Commission
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all right if you're going to stick
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around on this channel for some more
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study time check
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hit the little circle to my left I would
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appreciate it and we'll see you in the
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