You must keep sharpening your real estate agent skills at every stage of your real estate career. Completing a listing agreement is critical when working with real estate landlords. You can’t enter the property into the MLS unless you have this listing contract. The following are some things you need to know thoroughly about listing agreements.
Types of Listing Agreements
There are three main types of listing contracts. Each of them gives you, as their real estate broker, the authority to act on the landlord’s behalf in leasing the property.
Exclusive Right to Lease
This gives the real estate broker the exclusive right to earn a commission. To do this, you represent the owners and find the right tenant for them. You can do this yourself or through another brokerage, but you are the one who has the right to earn the commission. However, keep this in mind: Another agent can find the listing and bring a renter. If so, they get a part of the commission. But still, as the listing broker, you always get your share, even in this case.
It’s probably easy to see why this is the most common type of listing agreement. The real estate broker gets the highest reward for their work, and the landlord benefits from working with a financially motivated broker.
Exclusive Agency Listing
Another option is an exclusive agency listing. The real estate broker doesn’t necessarily get a commission in this type of contract. That’s because the landlord is free to find their renter. If they do, they do not pay a commission at all. On the other hand, if the real estate broker’s agents have excellent realtor skills, they may find a tenant first. In that case, they get the commission as outlined in the listing contract.
In an open listing agreement, the landlord is allowed to list with multiple real estate agents. Then, the agent that puts those realtor skills to work and finds the highest-paying tenant gets the commission. No one else but that winning agent gets any commission for the listing. Yet, even an open listing can help a real estate agent gain contacts that may lead to future leases or sales.
What’s In a Standard Listing Agreement?
Many brokerages supply a standard listing agreement for their agents. Yet, even with this document, real estate agents need good realtor skills. After all, you need to be able to fill it out correctly, include any special agreements, and, most importantly, be sure it’s properly signed. Here are some entries you’ll have to fill out in a standard listing agreement.
It’s simple but necessary: you must add each party to the contract. This includes landlords and brokers. Of course, you’ll need the property description, including the legal description of the property, as well as its address, city, county, and any identifying numbers.
Other parts of the contract are related to the broker’s relationship with the landlord. For example, the landlord must give the broker the authority to lease the property. Remember to add each property owner and broker. The broker’s obligations should be explained clearly. In other words, what is the broker’s responsibility to the landlord, and what tasks should the landlord take to other professionals? The landlord should also have obligations, such as making the property available for viewing.
The brokerage relationship must also be spelled out. In many cases, the leasing agent may be considered a transaction broker. But you should know and include whatever brokerage relationship is proper in your state.
The contract should also discuss the broker’s authority. This has much to do with how the broker markets the property and its channels. If you have excellent realtor skills, you will know the best ways to get the property in front of many tenants. Including any requirements to list the property in the MLS is also essential. Finally, you will need to include the ending date of the contract. This is when your relationship with the landlord is over unless you make a new agreement.
Compensation for Brokers
This part lays out which broker or brokers will receive compensation. This could be only the realtor who contracted with the landlord. Or it could also include other brokers, such as subagents, tenants’ agents, or others.
Listing Price and Terms
In Roadmap to Success: Landlords, you can learn how to use a CMA and other tools to recommend the right listing price. The landlord must agree. If they disagree, you can work out another listing price or let another broker work with the landlord. You’ll not only need a firm starting list price, but you will also need to include any terms or conditions the landlord requires.
Wrapping Things Up
In some cases, the landlord may want to terminate the agreement. If so, the contract should have detailed how this works and what fee the landlord will pay. The listing agreement should also cover dispute resolution.
Lastly, all the landlords (if there are more than one) and the agent or broker must sign the document. One of your real estate agent skills is to know when you must deliver the signed contract to the landlord in your state. When all that is concluded, you have completed the listing agreement. Now, it’s time to get out there and find the landlord’s ideal tenants!