Most residential real estate is sold as an "exclusive right-to-sell" listing. That means that only one brokerage has signed up with you to list, market, and sell your home. That brokerage acts as your agent and you (the seller) agree to pay a commission to the agency regardless of whether the property is sold through the efforts of the listing broker, the sellers, or someone else.
This is the contract that you sign with me (your agent) when you list your house for sale. You are actually granting Baird & Warner Real Estate the exclusive right to sell your property - I am listed as the "designated agent."
The main parts of this listing contract are:
- Your name and property address
- The agreed upon listing price
- The length of this agreement. Our contract defaults with one year but I will take six-month listings. The agreement can be terminated with written notice - but be aware that there may be a charge for doing this to cover some basic costs that have been incurred.
- The commission - this is where you enter the commission that you and the brokerage have agreed to.
- Paragraph 5 outlines the services that we provide to the seller - our job, essentially. It is also where we discuss that we will cooperate with other brokerages and offer them a co-operating commission which is a percentage of the total that we are being paid by you.
- Our duties - we pledge that we maintain confidentiality in anything you have told us.
- Your (seller) duties - you agree to cooperate fully with Baird & Warner and to handle all negotiations through me. Additionally, the seller agrees to remove all valuables and upkeep the home. There is also a provision for entry into the home for showing - lockbox or whatever has been decided.
- Should you decide to rent your house instead of sell, this paragraph allows you to do so. You agree to a $50 fee plus one month's rent. Thereafter, you agree to pay an 8% commission for every year thereafter (I do not charge beyond the first year.) If the renter decides to purchase the property during the time of the lease or within 12 months of the termination, you also agree to pay the full commission amount for a sale.
- Fair Housing - you will need to initial this paragraph which states that you will not refuse to show or sell to, "any person on the basis of race, color, religion, national origin, sex, ancestry, age, marital status, physical or mental handicap, military status, sexual orientation, unfavorable military discharge, familial status, order of protection, or any other class protected by Article 3 of the Illinois Human Rights Act."
- Sellers acknowledge that their agent may be working with other buyers and sellers. And if I am working with a buyer interested in your property (dual agency) then I will keep any information from you confidential from that buyer.
- Baird & Warner will hold all earnest money consistent with Illinois law. If there is a dispute or default on the contract, Baird & Warner will pay out the earnest money if there is joint written direction from the buyer, seller, or as directed by a court of law.
- Dual Agency - while you must sign a separate form for this, there is a space on this contract for you to either accept it or not.
- If there is more than one offer on your property (multiple offers) then you will give me written direction as to whether or not to disclose to other buyers and their agents the existence of the other offers. Why is this important? As a seller, you might think that it will stimulate enthusiasm for all buyers to rush forward with their highest and best offers. In truth, some buyers will walk away, not to be tempted by overpaying and bidding against someone else. It is wholly your decision.
- This paragraph states that the seller will be responsible for providing an up-to-date survey, title, and title insurance. These items will be handled by your real estate attorney (who is intrinsic to the transaction in Cook County - not required, but customary.)
- Informs you that Baird & Warner has affiliated companies - a title service and a mortgage service.
- Indemnification - seller agrees to provide truthful disclosures about the property and to hold Baird & Warner harmless against claims or lawsuits against the property.
- If you are selling a condo, you agree to comply with all requirements Illinois Condominium Property Act.
- This line states that all signatures, whether electronic or original will be consider original. Additionally, if one part of the contract is unenforceable for some reason, the rest of the contract will remain in effect.
- Commission payment - if you default on either this contract or the purchase contract for your home, then you shall pay Baird & Warner the commission due following the default or settlement.
- Taxes and assessments - I complete this area showing the real estate property taxes for the most current year available, any assessments or special charges, and exemptions. This is also where you indicate the items that normally would stay with the house but you would like to take.
- This agreement supersedes any prior agreement. No changes shall be made to the contract without being in writing and signed by all parties.
These are the main provisions of this contract which is three pages long. You have just agreed to list your house exclusively with a particular brokerage and agent. . I occasionally have sellers who want to pass the contract by their attorneys. Fine - but remember everything must be in writing and signed by both sides.
There are other documents to sign at the time of signing the listing agreement. These include the Illinois Residential Real Property Disclosure, a Lead Paint Disclosure, and a Radon Disclosure. We also have you sign a form that acknowledges that we own a lender and title company - it is required by law that you sign and understand this. You are not required to use either of these affiliates.
When you meet with your agent, be sure to read every line together. Ask questions if you don't understand one of the provisions. The sample contract in the link above is for the exclusive use of Baird & Warner. Other brokerages have their own listing agreements, but they are all based on the official Illinois Association of Realtors form.