Washington Real Estate Fundamentals
Lesson 8:
Listing Agreements
© 2011 Rockwell Publishing
Listing Agreements
Listing agreement: Contract in which property
owner hires real estate firm to help sell the
property.
 Creates agency relationship.
 Parties: seller and real estate firm.
 Licensee working for firm fills out form,
but is not party to contract.
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Listing Agreements
Earning a commission
Real estate firm’s compensation:
commission, also called brokerage fee.
 Usually percentage of property’s selling
price.
 Percentage specified in listing
agreement.
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Earning a Commission
Right to sue seller
If seller doesn’t pay commission, firm can sue
if three requirements met:
1. Written agreement with seller.
2. Properly licensed before services
offered or promise of compensation
procured.
3. Terms of listing agreement fulfilled.
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Earning a Commission
Ready, willing, and able buyer
Under most listing agreements, seller must
pay commission only if a ready, willing, and
able buyer is found during listing period.
Buyer considered ready and willing if:
 offer meets price and terms set by seller
in listing agreement, or
 seller accepts offer even though listing
price and terms not met.
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Ready, Willing, and Able Buyer
Financially able
In addition to being ready and willing, buyer
must also be able:
 Has capacity to enter into binding
contract.
 Has financial resources to complete the
purchase.
 Sufficient cash, or can qualify for loan.
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Ready, Willing, and Able Buyer
Commission without closing
Once ready, willing, and able buyer found,
commission earned.

Firm generally entitled to payment even
though sale never closes, if seller’s fault:
have marketable title or
 changes mind about selling
 doesn’t
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Earning a Commission
Types of listing agreements
When real estate firm entitled to payment
also depends on type of listing agreement
used.
Three basic types:
 open listings
 exclusive agency listings
 exclusive right to sell listings
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Types of Listing Agreements
Open listings
Open listing: Seller promises to pay firm a
commission only if firm’s affiliated licensee
was procuring cause of sale.
Procuring cause: Person primarily
responsible for bringing about agreement
between seller and buyer.
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Open Listings
Procuring cause
Open listing also called nonexclusive listing,
because it may be given to several firms.
 Firms do not promise to make effort to
find buyer.
 Agents may put less effort into these
listings because of risk they won’t get
paid.
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Open Listings
Not favored by brokers
Open listings generally used only at seller's
insistence.

No advantage for real estate firm.

Competing firms may end up in a dispute
over who was the procuring cause.

Many MLSs don’t allow agents to submit
open listings.
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Types of Listing Agreements
Exclusive agency listings
Exclusive agency listing: Entitles firm to
commission if anyone other than seller finds
buyer during listing period.

Seller gives listing to only one firm.

If seller finds buyer on his own, no
commission owed.

If anyone other than seller finds the
buyer, listing firm entitled to commission.
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Types of Listing Agreements
Exclusive right to sell listings
Exclusive right to sell listing: Entitles firm to
commission if property sells during listing
period, no matter who finds buyer.

Seller gives listing to only one firm.

Commission owed even if seller finds
buyer without help.

Most frequently used type of listing.
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Types of Listing Agreements
Due diligence
While open listing is unilateral contract,
exclusive listing is bilateral contract.
 With exclusive listing, firm gives express
or implied promise to market the property
and make diligent effort to secure a
buyer.
© 2011 Rockwell Publishing
Summary
Earning a Commission
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Listing agreement
Commission
Ready, willing, and able buyer
Open listing
Procuring cause
Exclusive listing
Exclusive agency listing
Exclusive right to sell listing
© 2011 Rockwell Publishing
Elements of a Listing Agreement
Basic requirements
Four basic requirements for enforceable
listing agreement in Washington:
 Identifies property.
 Includes authorization for firm to market
property.
 States what the compensation will be.
 In writing and signed by seller.
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Elements of a Listing Agreement
Typical provisions
Although an enforceable contract can be a
very simple document, lack of detail can
cause misunderstandings .
Generally, real estate firms use preprinted
listing forms, which spell out the terms of the
agreement in detail.
© 2011 Rockwell Publishing
Typical Listing Provisions
Agency authority
Listing agreement form usually begins with:
 identification of brokerage firm
 description of agency authority granted to
firm
Provisions of contract also apply to listing
licensee as subagent.
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Agency Authority
Limitations
Despite the term “exclusive right to sell,” firm
is not given authority to actually sell the
property, only to solicit offers.
 Seller who wanted to give brokerage firm
authority to sign purchase and sale
agreement would have to execute and
record a power of attorney.
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Agency Authority
Earnest money deposits
Agreement usually authorizes firm to receive
earnest money deposits from buyers.
 That means firm acts for seller when
accepting deposit from a buyer.
 If firm’s agent stole a deposit, it would be
the seller’s loss, not the buyer’s.
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Typical Listing Provisions
Listing period
Agreement should always specify date on
which firm's agency authority will end.
 But termination date not required for valid
listing in Washington.
 If not specified, agreement ends after
a reasonable time.
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Typical Listing Provisions
MLS provision
Agreement authorizes firm to submit listing to
a multiple listing service.
 Allows information about the property to
reach more potential buyers.
 MLS agents are cooperating agents.
 Commission split will follow MLS rules.
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Typical Listing Provisions
Agency disclosure
Most listing agreement forms include an
agency disclosure provision.
 Seller authorizes firm to appoint listing
licensee to act as subagent of seller.
 Other licensees working for firm do not
automatically represent the seller, and
may represent the buyer.
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Typical Listing Provisions
Agency disclosure
If buyer found by another licensee affiliated
with listing firm, firm will be acting as dual
agent.
 By signing listing agreement, seller
consents to this dual agency.
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Typical Listing Provisions
Short sales and distressed properties
When listing a potential short sale, agent
must disclose that lender’s approval of short
sale won’t relieve seller of liability for costs
owed at closing (including brokerage
commission).

Short sale: Proceeds aren’t enough to
repay liens against property but lender
still releases borrower from debt.
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Typical Listing Provisions
Short sales and distressed properties
Agreement may also have provision in which
seller warrants property is not distressed.

Distressed property: Home in foreclosure
or imminent danger of foreclosure.
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Typical Listing Provisions
Access and keybox provision
Seller agrees to allow agents access to
property at reasonable times.
Keybox: Secure device holding copy of house
key, which seller locks to porch railing or
other place outside house when leaving.
 MLS listing forms authorize installation of
keybox so agents can show property
when seller is absent.
© 2011 Rockwell Publishing
Summary
Elements of a Listing Agreement
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Basic requirements
Brokerage’s agency authority
Termination date
MLS provision
Agency disclosure
Property not distressed warranty
Access and keybox provision
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Typical Listing Provisions
Commission provisions
Listing forms have a space for filling in
commission amount or percentage.
To comply with antitrust laws, commission:
 cannot be pre-printed on form
 must be negotiable between firm and
seller for each transaction
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Commission Provisions
Net listings
Net listing: Agreement specifies net amount
that seller wants from sale; brokerage firm will
keep any proceeds over that amount as
commission.

Net listings prohibited in Washington.
© 2011 Rockwell Publishing
Commission Provisions
Earning the commission
Under exclusive right to sell listing form, seller
must pay commission if:
 ready, willing, and able buyer is found
during listing period;
 property sells during listing period; or
 extender clause applies and buyer is
found within extension period.
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Commission Provisions
Extender clause
Extender clause: Provides that if property is
sold during specified period after listing
expires, seller may still owe commission.
 Also called safety clause, protection
clause, or carryover clause.
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Extender Clause
Terms of clause
Extender clause may apply:
 only if firm’s agent negotiated with
eventual buyer, or
 if buyer merely learned about property
through firm’s agent.
Firm may be required to give seller list of
names of buyers that firm’s agents had
contact with during listing period.
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Extender Clause
Safeguards for seller
Seller may relist property with different firm
during first listing’s extension period.
 To protect seller from liability for two
commissions, extender clause may
provide that seller doesn’t have to pay
first brokerage if seller owes another
brokerage a commission under a
subsequent listing agreement.
© 2011 Rockwell Publishing
Typical Listing Provisions
Rental or option provision
Many listing forms prohibit seller from leasing
or granting an option on the property during
listing term.
 Seller who violates this provision liable
for entire commission.
 Brokerage firm not required to pass on
offers other than offers to purchase.
© 2011 Rockwell Publishing
Typical Listing Provisions
Property description
As mentioned earlier, listing agreement must
include description of the property.
 Best to use complete legal description,
which will be needed later anyway.
 Can copy description from seller’s deed.
 If description won’t fit in space provided,
attach separate sheet.
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Typical Listing Provisions
Closing costs provision
Seller customarily pays certain closing costs,
such as:
 premium for buyer's title insurance
 state excise tax
 half of escrow fee
Most listing agreement forms have provision
specifying closing costs seller agrees to pay.
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Typical Listing Provisions
Seller’s warranties
For brokerage firm’s protection, seller
warrants that:
 seller has right to sell property as offered
 property information provided in listing is
correct
Agreement may also include warranties
concerning other matters such as
encroachments and zoning compliance.
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Typical Listing Provisions
Seller’s warranties
In seller’s warranties section or elsewhere,
listing agreement usually includes a hold
harmless agreement.
Hold harmless agreement: Clause in which
seller agrees to indemnify brokerage firm for
any losses that result from mistakes or
omissions in information provided by seller.
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Typical Listing Provisions
Seller disclosure statement
Agreement may require seller to give agent
disclosure statement as soon as possible.
 Seller eventually has to provide it to
buyer.
 Allows agent to learn about potential
problems right away.
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Typical Listing Provisions
Seller disclosure statement
Listing agreements also typically provide that
seller takes full responsibility for information
in the disclosure statement.
This protects the listing agent from liability if a
buyer sues because of a problem with the
information in the disclosure statement.
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Typical Listing Provisions
Damages in event of buyer’s breach
Agreements often provide that listing agent is
entitled to half of any damages that seller
receives as a result of buyer’s default.
 Listing agent would get half of the
forfeited earnest money.
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Typical Listing Provisions
Attorneys’ fees provision
Listing agreement usually provides that if
either party has to sue to enforce contract,
losing party will pay winning party’s attorneys’
fees.
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Listing Agreements
Signatures
Agreement signed by listing agent on behalf
of firm and by seller(s).
 Agent fills in firm's name on 'Brokerage'
line, signs own name on 'By' line
 All co-owners of the property, and their
spouses, should sign as sellers.
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Listing Agreements
Listing information
Listing input sheet: Form with detailed
information for submission to MLS and
distribution to MLS members.
 Property address and location
 Architectural style and age of home
 Listing price and commission
 Listing agent and expiration date
 Number of bedrooms and bathrooms
 County tax ID number
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Listing Agreements
Seller’s acknowledgment of receipt
Agreement may also have provision in which
seller acknowledges that listing agent
provided:
 copy of signed listing agreement
 copy of pamphlet about real estate
agency
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Listing Agreements
Distressed property listings
Washington’s Distressed Property Law helps
protect homeowners against foreclosure
rescue scams.
 Special rules apply to certain
transactions involving distressed homes.
 Licensees who meet law’s definition of
distressed home consultant must comply.
 Licensees providing routine brokerage
services are exempt.
© 2011 Rockwell Publishing
Summary
Listing Agreement Provisions
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Commission rate
Net listing
Extender clause
Rental or option provision
Closing costs provision
Seller’s warranties
Hold harmless agreement
Seller disclosure statement
Attorneys’ fees provision
© 2011 Rockwell Publishing