Real Estate Listing Agreements in Sonoma County

Select a Listing Agent and Get it in Writing

After you have selected a real estate listing agent whom you want to sell your home, you need to meet with the agent and determine the type of listing agreement that is agreeable to both of you. The listing agreement must be in writing and it provides the legal authority for the agent to act on your behalf. As with all contractual agreements, it is imperative that you understand each part of the agreement before you sign. I personally prefer to use the agreements created by the California Association of Realtors (CAR) because they are continually updated to reflect changes in California real estate laws and they were created to protect both the seller and the agent.

Basic Types of Listing Agreements used in Santa Rosa and Windsor

The following paragraphs describe the most common listing agreements used in the Santa Rosa Ca and Windsor area today. My descriptions of these types of agreements are an oversimplification of the agreements, and are intended as a general guide only. There certainly are other agreement types which I have not discussed, but I have found the following to be used in the majority if listing situations;

Exclusive Right to Sell Agreement

The most frequently used residential listing agreement in Sonoma County, is the "Exclusive Right to Sell" type of agreement. When using this agreement, the real estate listing agent earns a commission when the property sells, regardless of who obtained the buyer for the property. The agent has the exclusive right to sell your home during the term of the agreement. With this agreement, even if you stand on a corner every weekend passing-out flyers and get a buyer for your house, you still have to pay the agent’s fee.

The Agency Agreement

Another type of listing agreement available in the Santa Rosa or Windsor area is the "Agency" type of agreement. When using this kind of agreement, you (the seller), retain the right to sell the property directly to a buyer, as long as your buyer is not represented by an agent. If the buyer is represented by a licensed real estate agent, then your listing agent has earned a commission. Several issues arise when using this type of listing agreement; the most common are disputes whether it was the owner or the agent that introduced the buyer to the property.

The Non-Exclusive Agreement

The next kind of listing agreement available is the "Nonexclusive", or "Open" type of agreement. When using this kind of agreement the seller retains the right to sell the property to anyone, even if the buyer is represented by another agent. The listing agent is only due a commission if they bring the buyer to the transaction. This type of agreement is typically “unilateral” meaning that the agent makes no promise that they will work diligently to find a buyer.

The Single Party Agreement

The last type of listing agreement available in the Santa Rosa Ca, or Windsor area is the "Single Party” type of agreement. This type of agreement is typically used when the seller of the property is only willing to provide compensation to a broker who represents one specific buyer. This particular buyer's name is then included on the agreement and the agreement only relates to a transaction between the seller and that particular buyer. This might be used in the case for a FSBO (For Sale By Owner) which is not listed on the MLS and has gotten discouraged because their house has not sold. If a Buyer would like to submit an offer on the property through the use of a buyer's agent, this agreement would work.

Why are so Many Agreements Used in the Santa Rosa Area?

Like every market, the Sonoma County real estate market is at times a Seller’s market, a Buyer’s market or a Balanced market. With each of these different market conditions, there are different needs. The California Association of Realtors (CAR) has tried to respond to these market conditions as well as the individual needs of Sellers, by creating various agreements.

In my opinion however, there is really only one type of agreement that will get the kind of activity you want (especially in a buyer's market). This is the “exclusive right” type of agreement. In most cases, this is the only agreement that provides your agent with the right kind of assurances for them to be willing to spend the maximum amount of money and time marketing your property. Each of the other kinds of agreements provide a significant chance that your listing agent could spend a bunch of money and time marketing your property and never get paid anything.

It's very important to remember that marketing a property will cost the agent money. I think that the amount of time, money and effort most agents are willing to spend marketing your property, is proportional to how strongly they believe the property will sell. That is how they pay their bills. If they believe the property is overpriced, then it is less likely to sell. If the seller has insisted on an agreement that significantly limits the chance that the listing agent will be paid for their efforts, they are less motivated. Remember; You not only want the best agent you can find, but you want that agent excited and totally motivated about selling your property. In a strong buyer's market, most agents will simply refuse to take a listing if some of the above conditions exist. If you have special conditions or an unusual situation, talk with your agent about the best ways to mutually satisfy your requirements.

Talk to Your Real Estate Agent About Dual Agency

One thing you must cover in a conversation about agency agreements is Dual Agency. If you do not want your agent to participate in Dual Agency, now is the time to talk about this. Most standard listing agreements allow Dual Agency by default, and some have a section within the agreement that allows the client to specify if dual agency will be allowed. Read my article on The Dangers of Dual Agency and remember that an important part of your negotiation and final agreement with the agent is whether you want them to act in the role of a dual agent or not.

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