What is a Listing Agreement? Terms Sellers Should Know

Whatever your reasons for selling a home—upgrading, downsizing, or making a strategic move—the most important part of the process, besides getting the money you deserve for your property, is the least amount of stress possible. The listing agreement is one of the most essential documents to ensure stress levels will be at a minimum.

A listing agreement is a contract that officially allows a real estate agent to market and sell your property. It’s the foundation of your entire selling process, setting expectations, defining responsibilities, and—most importantly—laying out the financial details.

For sellers, understanding what you're signing is key to avoiding headaches down the road. 

Below, the team from Prevu Real Estate will break it down for you, explaining everything you need to know about real estate listing agreements. We’ll review how they are structured, the different types, and what you should always pay attention to before signing.

What is a listing agreement?

A listing agreement is the official contract between a homeowner and a listing agent and their brokerage. It gives the agent the legal right to represent you in selling your home, typically in exchange for a commission. This agreement outlines the terms of the arrangement, including how long it will last, how your agent markets and lists the property, and how much the agent gets paid once the deal is sealed.

But here’s the kicker: Not all listing agreements are the same. They come in different flavors, each with its own set of rules and levels of commitment. Choosing the right one depends on how much control you want over the sale and how involved you want the agent to be.

Types of listing agreements explained

• Exclusive right to sell
• Exclusive agency
• Open listing

Exclusive right to sell

This is the gold standard of listing agreements. When you sign an agreement with an exclusive right to sell, you’re granting your agent complete control over the sale of your home. No matter who finds the buyer—you, the agent, or a random stranger at a coffee shop—your agent is entitled to their commission. This is the most common type of listing agreement because it gives the agent plenty of incentive to market your home aggressively.

Exclusive agency

Think of this as the "almost exclusive" agreement. You’ll agree to terms with a listing agent under an exclusive agency listing, but there’s a twist. If that agent brings in the buyer, they are entitled to a commission. However, if a seller finds a buyer themself, they can sell their home without paying the agent a commission, or only pay an agreed upon reduced commission for the services provided.

Open listing

This is the wild west of listing agreements. It’s non-exclusive, meaning you can work with multiple agents simultaneously, and only the agent who sells the home earns a commission.

Sounds great in theory, right? The downside is that since agents aren’t guaranteed payment, they likely won’t place your home as their top priority. This type of agreement is most common in hot seller’s markets where homes sell quickly. 

In addition, many local agent associations only allow exclusive listing agreements to be entered into the MLS. As a result, open listings may lack the visibility of an exclusive listing. Therefore, you are much more reliant on only the individual network of the agent you sign an open listing with.

What are the key terms of a listing agreement?

• Duration of the agreement
• Listing price
• Type of listing agreement
• Commission rate and payment
• Marketing strategy and agent responsibilities
• Disclosures and seller obligations
• Termination clauses
• Protection period

A listing agreement might seem like a straightforward contract between a seller and a real estate broker, but its fine print contains crucial terms that define how the sale will be handled. Understanding these components is essential for any seller who wants to navigate the home-selling process confidently.

Duration of the agreement

Most listing agreements last three to six months but can be a shorter or longer listing period depending on the market and your personal goals. Be wary of contracts that lock you in for an extended period with no way out. If things aren’t going well, you don’t want to be stuck in a contract with a weaker agent.

Some listing agreements will note the duration of the listing as a number of days from the effective date of the agreement, while others will specifically state an expiration date.

Listing price

The listing price is the foundation of your home sale—it determines how your property will be marketed and what kind of buyer interest you’ll attract. Your real estate agent will provide a Comparative Market Analysis (CMA) to help you determine a competitive and realistic asking price based on recent sales in your area. While the final decision rests with you, this number sets the tone for negotiations, buyer interest, and overall market strategy.

Pricing too high may cause your home to sit on the market longer than necessary, while underpricing could mean leaving money on the table. Your agent’s role is to strike that perfect balance—maximizing your return while ensuring a timely sale.

Type of listing agreement

Not all listing agreements are created equal; understanding the different types is crucial. As we mentioned earlier, the most common types include:

Exclusive Right to Sell – This is the most common type, where your agent has full control over marketing and negotiations, earning commission regardless of who brings the buyer.

Exclusive Agency – You still work exclusively with one brokerage, but if you find the buyer yourself, you may avoid paying a commission to the listing agent.

Open Listing – A non-exclusive arrangement where multiple brokers can compete to sell your home, but only the one who closes the deal gets paid.

Commission structure and payment

This determines the payment for your agent for offering their services, and is typically calculated as a percentage of the sale price of a completed sale, or in some cases a flat fee. Remember the golden rule: the commission rate is always negotiable between you and the brokerage. The same goes for other factors, including the option to offer a seller-paid buyer’s agent’s commission, if the potential buyer is represented by their own agent.

Recent changes stemming from NAR rules changes in August 2024 following legal rulings have shifted how commissions are handled in real estate transactions. Be sure to thoroughly discuss this with your listing agent to make sure everyone is on the same page about how the commission structure and payment will be handled and how documentation is included in a listing agreement.

Key commission changes related to NAR court settlement:

• Seller-paid buyer agent commissions are fully negotiable rather than an industry standard entered into the local MLS.
• Sellers can choose whether or not to offer compensation to the buyer’s agent—this must now be explicitly stated in the listing agreement.
• MLS platforms may no longer display buyer agent commissions, meaning that sellers, buyers and agents must discuss and negotiate this on a transaction by transaction basis.
• Buyers need to negotiate their agent’s fees separately, which could mean sellers face fewer assumptions about covering both sides of the transaction.

Marketing strategy and agent responsibilities

How your home is marketed can make or break its visibility among potential buyers. A solid listing agreement should clearly outline the agent’s responsibilities regarding:

• Professional photography and videography to showcase your home’s best features
• Online listings on major platforms and MLS databases
• Social media promotion, email campaigns, and virtual tours
• Hosting open houses and private showings
• Negotiation tactics and strategy for handling multiple offers

Make sure your agent details their marketing approach upfront, ensuring you know exactly how your home will be presented to the market.

Disclosures and seller obligations

A listing agreement will clearly outline the seller’s responsibility to provide accurate and honest information about the property’s condition. 

These disclosures may include detailing any renovations, structural changes, or defects that could impact the home’s value or use. Sellers must also disclose known issues like foundation cracks, roof leaks, or electrical problems—anything that could affect a buyer’s decision. Transparency at this stage helps prevent any confusion and builds trust between both parties.

In most states, sellers are required to complete and sign mandatory disclosure forms that list any past or present issues with the property. These forms vary by location but often cover water damage, pest infestations, HVAC malfunctions, and zoning violations. Some states even require sellers to disclose prior repairs, insurance claims, or neighborhood nuisances like excessive noise or flood risks. A real estate agent or attorney can help ensure that all required disclosures are properly completed, preventing any costly oversights.

Failing to disclose known defects can have serious legal repercussions. If a buyer discovers undisclosed issues after closing, the seller may face financial penalties, lawsuits, or even the possibility of the sale being reversed. 

Termination clauses

Real estate transactions don’t always go as planned, and sellers need to know their rights if they decide to withdraw from the agreement early. 

The most common reason for termination is lack of performance from the agent—for example, if they fail to market the property effectively, provide poor communication, or don’t meet the seller’s expectations in generating interest and offers. Sellers enter these agreements with the hope of a proactive and strategic agent, but if results are lacking, the termination clause provides an important exit strategy.

Another valid reason for terminating a listing agreement is a major change in the seller’s circumstances. Life happens—whether it’s a job transfer falling through, financial shifts, or a sudden decision to stay put. If a seller has second thoughts or faces an unforeseen situation that makes selling impractical, the termination clause may allow them to back out. In some agreements, a voluntary termination by a seller may allow the listing agent to recoup an agreed upon amount for a portion of their marketing fees since a commission on a sale is no longer possible.

In other cases, an agent and seller may mutually agree to part ways early, especially if it’s clear the relationship isn’t working or the market conditions aren’t favorable. A professional agent will often prefer to end things amicably rather than force a transaction that isn’t beneficial for either party.

But the most important thing is to make sure these potential scenarios are discussed ahead of time and are explicitly accounted for in the listing agreement. 

Protection period

A protection period in a real estate listing agreement is a set timeframe after the contract expires during which the listing agent may still be entitled to a commission. This clause is intended to protect the agent if a buyer they introduced to the property during the listing period decides to purchase the home shortly after the agreement ends. Without a protection period, a seller could potentially wait until the listing expires to avoid paying a commission, even if the agent’s efforts directly led to the sale.

Typically, the protection period lasts between 30 to 90 days, though the exact duration is negotiable. For the agent to claim a commission, the buyer must have been someone they procured while the agreement was active, and the agent is usually required to provide a written list of a specified number of buyers - sometimes referred to as a protection list - at the time the listing agreement expires.

However, if a seller relists with another brokerage or sells to a new, unintroduced buyer that is not on a protection list, the previous agent’s claim is invalid. Understanding this clause helps both sellers and agents navigate post-listing sales fairly.

Alternatives to listing with traditional brokerages 

The traditional full-service real estate agent is no longer the only game in town. Thanks to technology-driven brokerages, discount real estate services, and flat-fee listing options, sellers now have more choices than ever when it comes to how they sell their home.

Many of these alternative models are now reflected in listing agreements, offering sellers a variety of service levels and pricing structures, including:

• Flat-fee MLS listings - Owner pays  a one-time fee to list your home but handle the sale process yourself.
• Discount brokerages - Owner pays a lower commission rate in exchange for fewer services.
• Tech-based platforms - Brokerage streamlines the home-selling process for owners with increased tech tools and less agent involvement.
• For Sale By Owner (FSBO) - Owner handles the entire process with no support via major portals, personal social networks, or marketing sites.

Before signing a listing agreement, consider the service level you need. If your home is in a high-demand area and you feel comfortable handling some aspects of the sale, an alternative brokerage might be a more cost-effective option. However, a traditional agent may still be the best fit if you want full-service marketing, negotiation expertise, and hands-on guidance.

Interested in selling your home? Learn how you can save thousands on commission with Prevu's seller services.