Listing Clause...Vesting Sellers

Real Estate Agent with Rocky Mountain Realty Co.

I wanted to pass this on to you. It's a clause that I am having my agents put in all of their listing contracts during this market cycle. Maybe forever. I have found that when doing a listing with a Seller, they are more likely to help keep their end of the bargain if they have something vested themselves. Use it if you's my permission!

Throughout the years, I have found that if Sellers approach the listing process with a "What the heck, it's not going to cost me anything..." approach, you will end up losing money in the long run. Listings, when property marketed, cost money. There's sign placement, printing, advertising, open houses, etc... Then there are wasted showings where the Seller "doesn't find it convenient at the time" or cannot be bothered to answer a showing request for some unknown reason.

   A Listing Agreement is NOT a One Sided Deal!

HOWEVER, a Listing Contract is a contract.  That means it has parts for all the parties to perform. If a party does not perform to his or her part, there are consequences. For so long, the brunt of the consequences have fallen upon the Listing Agent, weather the default has been on the part of the Principle(s) or the Agent.

Therefore, here at Rocky Mountain Realty in Colorado Springs, CO, we have started putting this clause in all of our Listing Contracts:

"In the event the Seller opts to cancel or withdraw this listing before it's term, the Seller agrees to pay the Listing Broker a fee of 500.00 OR actual documented marketing expenses, (whichever is more), within 30 days of termination of this contract. This fee will also be paid by the Seller in the event that the Seller is unwilling to show the property during reasonable times as outlined in this agreement, or in the event the Seller fails to perform to the specifications contained in this agreement."

After all, guys, our consequences take up the remaining 5 pages of the agreement, don't they? I have yet to have one person refuse to sign the agreement. Instead, when I read through the paragraph, I explain, "We have developed this policy because there have been some Sellers, believe it or not, who have caused us to spend all sorts of money on their behalf, only to cancel the listing or refuse to show". They invariably say, "Well that sounds reasonable" or "That's only fair."

Anyway, I think we should all work hard...but then we should ALWAYS get paid something.

Comments (8)

Vanessa Krempa
Princeton, NJ
That's great to see sellers are willing to sign this into the contract.
Apr 20, 2008 07:57 AM
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate
We use standard listing agreements that are supplied by our Association. They have a similar clause in them. We just fill in the blank. I posted a blog a while back about this same topic. By letting the sellers know, up front, that there will be a withdrawal fee if they take the home off the market, you're able to weed out the non-serious sellers. There were some heated comments on my post, but my time is worth money. Not to mention any advertising that has been done. But $500 was the amount I was using quite a few years ago. I now use a minimum of $1000 as the withdrawal amount.
Apr 20, 2008 11:11 AM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY
This is very important for seller's to grasp.  What many don't understand is that we incur up-front costs and they often far exceed what we can ever get back should they cancel the listing.  Our business is HIGH RISK. ... We incur the risk - and that's in good part WHY we have to charge what we do.
May 03, 2008 08:37 AM
James Wexler - Scottsdale, AZ


I beleive that this approach will make sellers understand the time and resources necessary to successfully sell a home.  When I say successfully, I mean selling a home as quickly and for the highest possible price.  The clients who will agree to such a clause are usually the ones who believe what they need in terms of price for their home really matters to a potential buyer.

by the way, Do you have an outside blog that I can add to my Blogroll ?

Thanks and look forward to reading your thoughts on the world of real estate.

Jun 22, 2008 06:36 AM
Lania DeMers
Rocky Mountain Realty Co. - Colorado Springs, CO
Broker, Rocky Mountain Realty Co.

Thanks James! I don't have an outside blog...just one of those things I haven't gotten around to, but I should try. I don't even know where to begin! Anyway, I think Lawyers and Dr.s are still the only ones that get paid up front without promising your transaction will amount to anything you value...that just inspired a blog!

Have a great day!

Jun 24, 2008 06:12 AM
Terry Miller
Miller Homes Group - Tyler, TX
Miller Homes Group and Tyler Apartment Locator

Great Advice, Thanks

Nov 14, 2008 07:04 AM
Jen Bowman
Keller Williams on the Water - Holmes Beach, FL
Realtor - Anna Maria Island & Bradenton FL

Lania, I'm going to start explaining it your way. In the past year, I've had several sellers want to withdraw their listing just because they changed their minds about selling.  There's a Seller Default section in our Listing Agreement but it doesn't specify damages. I charge $350 to withdraw a listing, now after reading this, I know I am way too low. It takes a lot of time and money to effectively market a listing. I don't think many sellers realize that.

Dec 28, 2009 10:20 AM
Ron & Pat Gunder
Cherry Creek Properties, LLC - Highlands Ranch, CO

Sounds good to me!

Mar 29, 2010 12:18 PM

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