Listing a Property for Sale

Listing Agreements

Oregon law requires that an agreement authorizing or employing a broker to sell real estate for a compensation or commission be in writing. Such agreements are called “listing agreements.” A listing agreement is simply a written contract between the seller and their broker. The contract will contain the authorizations the broker needs to place the property in a multiple listing service, advertise and otherwise market and sell the property on the seller’s behalf.

Listing agreements contain important terms regarding how the property will be marketed, the asking price for the property, the obligations of both broker and seller, the duration of the listing, the broker’s compensation and other terms and conditions. Many listing agreements contain what are called “liquidated damages” clauses. Such clauses should be read carefully as they establish the damages that may be due the broker if the seller terminates the listing agreement without cause. Most listing agreements have a provision that determines how any forfeited earnest money will be distributed between seller and broker. Sellers should carefully read the listing agreement and go over its terms with their broker before signing.

Content taken from the Oregon Property Sellers Advisory at http://www.oregonrealtors.org/.docs/pg/10713#topic8.

Real Estate Brokers Compensation

In the state of Oregon, real estate brokers (agents) are employed as independent contractors and report directly to a principal broker representing the parent real estate company. The parent company may be a franchise such as Century 21 or Coldwell Banker or an independent such as Oregon Bay Properties, LLC.

When a seller decides to list their home with a real estate broker, they are entering into a relationship with the broker’s parent company. Commissions are paid to the parent company at the close of a sale then split with the broker based on the contract agreement. In almost every case, the entire real estate commission is paid by the seller with the rate of commission negotiated when the listing agreement is signed with the broker.

Real Estate brokers work on 100% commission and if the property does not sell, the broker does not get paid. Therefore, the broker is fronting all advertising and marketing expenses in the hope of a paycheck at the end of the sales process. To help the property sell faster, the listing broker will share the commission with the buyer’s agent.

For example, a property sells for $100,000 and was listed with broker A and sold by broker B. If the commission rate was 6%, the total commission paid at close of escrow from the sellers proceeds would be $6,000; broker A receives $3,000 and broker B receives $3,000. The money is paid directly to the parent company and split with the broker per their agreement with the principal broker. Total commission for broker A is $3,000 and their company split is 50% so broker A receives $1,500. Then they deduct advertising (average 30%) and taxes for the net pay to the broker.

Multiple Listing Services

A multiple listing service, called an “MLS,” provides information to real estate professionals who subscribe to the service about properties that are for sale in the area. Filing a listing with the MLS exposes the property to active real estate professionals in the local area. As such, it is a powerful marketing tool. The MLS is also a way for listing brokers to offer compensation to other brokers who may know of a suitable buyer. This cooperative feature of the MLS allows the listing brokers to share part of their commission with a buyer’s agent. It is the ability to attract buyers through their agents that makes the MLS such an effective marketing tool.

MLS data and remarks are a form of advertising and, as such, must be accurate and truthful. Sellers should, therefore, review MLS data and remarks for accuracy and bring any discrepancies or concerns to the attention of their agent. If personal property such as refrigerators, other appliances, furniture, tools, implements or accessories is listed as “included” in the MLS data, they become part of what is being offered for sale. It is like advertising that a car being sold includes floor mats. Once such items are advertised as “included,” the seller cannot unilaterally change their mind without risk of legal liability, even if the items are not specifically listed in the contract for sale.

Content taken from the Oregon Property Sellers Advisory at http://www.oregonrealtors.org/.docs/pg/10713#topic8.