This week I met with four different home owners who had just terminated their relationship with their previous broker. In each of these situations I noticed one strange component with the terms of their previous listing agreement...the length of the contract.
The length of the agreement between the broker and the seller can vary. In high-dollar homes (over 1 million) it is not uncommon to see a 1 year listing agreement, especially if they involve land or commercial transactions.
But what about the run of the mill $300,000 home?
Does it really matter if you're in Austin or Houston? I can't speak with clarity about another market, but I wouldn't advise anyone in Texas signing a 1-2 year listing agreement ANYWHERE in Texas for a 300k listing. I suppose there could be a special and very bizarre situation, but I can't think of one.
One of my newest clients found herself in a THREE year listing agreement for a 200k house. For the life of me I can't understand the benefit of handcuffing a client for that long. A lot of personal relationships don't make it 3 years, how in the world could a broker and seller get along THAT long talking about open houses, fliers and price reductions? Could you imagine asking for an updated market analysis from your Realtor for each quarter over a three year period? Stupid. Bad idea to get tangled up that long.
So, what about HOT markets where the average home sells in literally DAYS? Should a home seller sign a 6 month listing agreement? The shortest listing agreement I have ever agreed to as a Realtor is 30 days. The length of the agreement needs to be relative to the current market for the current area PLUS time for variance, the unknowns and area competition. If you list your home in August but look at "comps" and time-frames from June then you have to put things into a realistic perspective about the "time of year."
In almost all cases I see 6 months for the standard amount of time on most listing agreements.