First, let me say that I am only talking about the Georgia Association of REALTORS ("GAR") form F1, Exclusive Seller Listing Agreement. Forms vary from state to state, and there are different listing agreements in the State of Georgia also.
Each year the forms committee for the GAR attempts to tweak the forms to help buyers, sellers, agents and brokers. Some changes are minor, and some, not so much!
Each year around this time agents are assaulted with educational offers concerning a review of the new changes. This year the changes to the purchase and sale agreement were fairly minor so I am going to do a quick rundown on the listing agreement that most homeowners will be presented with when they list their home for sale with a licensed agent in Georgia.
First, I always attend one of the classes offered by an attorney - I just figure if I am going to learn more about contract forms, it is probably best to hear it from an attorney. Every single time I learn new and better ways of doing things that benefit me and my clients, in addition to learning about changes and new language.
Here are some things that I gleaned from a recent class that I believe are important:
1. As a seller it is a good idea to review the legal description contained in paragraph 2. Sounds like a simple thing, and chances are your agent has it documented correctly. However, if an error is made and then carried forward to a purchase and sale agreement, it can spell real trouble for all involved. Check the legal description against the legal description in your deed.
2. Be sure that you understand whether you are hiring a full service broker/agent, or a limited service provider. There is a difference and it will be important to you to understand the game plan from the start.
3. Read all of the documents that you sign - not only is it prudent for your own protection but it also helps you understand each parties obligations and you will feel more comfortable knowing what to expect from the process. Agents don't mind answering questions, that's what we do. However, so many times I find that the questions are readily answered by just a cursory review of the agreement, whether it's the listing agreement or the purchase and sale agreement. Reading it for yourself is much better than having your agent interpret it for you. Then if you still have questions, don't hesitate to take it a step further.
4. Read the commission paragraph. There is more there than just a number. Also, if you are asking for a concession in total commission from your listing agent and there are certain terms that you both agree will "activate" that change, be sure that it is documented by special stipulation to avoid misunderstanding later.
5. Understand your obligations after the listing expires. In our Georgia GAR form listing agreement it is called the protected period and it is described in paragraph 7(C).
6. Seller default. Too many times we sign these agreements and sellers believe that they can arbitrarily cancel or terminate without penalty. The cost of doing business is constantly rising and even if your broker/agent is willing to terminate the agreement, it is only fair that at least some of their marketing expenses are reimbursed if you are removing their ability to recoup them through a sale.
Personally, with the new retainer fee that was added in the GAR listing agreement (and buyer brokerage agreement) last year, I lean in favor of waiving the retainer fee and adding a special stipulation that if the seller terminates early for any reason, he will agree to reimburse broker X amount to offset marketing expenses and other costs. Rather than writing a check "up front" which is not something that consumers are accustomed to doing in real estate listing situations, most sellers will agree to this stipulation as a welcome compromise.
7. Seller's Property Disclosure. Providing a completed property disclosure to be used in conjunction with the sale of your property is your best protection from post-sale liability. Talk to your agent about any specific questions that you may have about the form or questions contained therein. Your broker/agent cannot tell you how to complete the disclosure, nor complete it for you. However, if you aren't sure whether a prior occurrence with the property should be disclosed, it probably should for your own protection. I find that buyers don't expect a property to have been repair free or trouble free. What they do expect is disclosure and honesty and when they feel that they know more about a property, they are more likely to make an offer on it.
8. Ask your agent if you have any questions about agency. In the past my experience has been that sellers are most confused about what happens when a buyer calls their listing agent to see the property. Does the listing agent then become the buyer's agent? Does the listing agent represent both parties? It depends on the type of agency that your listing broker/agent is offering. Refer to paragraph 13 in the GAR listing agreement and speak to your agent if you have questions or need further explanation. I like to tell my sellers that a buyer on one of my listed properties who comes to us without their own agent is my "customer". The seller is my "client". I still represent the seller, and negotiate for the seller. If the buyer wants me to show them the property or write an offer for them I can certainly do that but from the beginning agency disclosure must be made so that the buyer also understands the agency situation when they are dealing with the listing broker/agent. I do not personally offer dual agency even though it is legal in the State of Georgia.
The bottom line is that these forms are not written to be intentionally complicated. The forms committee attempts to spell things out so that everyone understands the terms easily, including the broker/agent!
If you are about to list your home, best of luck with a quick and profitable sale in 2010!
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