Types of listing contracts
A listing contract is an agreement between you and a licensed real estate broker authorizing the broker to represent you in selling your property. By far the most common type of listing contract is the “Exclusive Right to Sell”, but there are several other types.
Exclusive Right to Sell Listing
This is the most popular type of listing with sellers and brokers. Under a right to sell listing contract, the broker is the only one authorized to sell your property. If another agent finds a buyer, your broker earns a commission. If you find a buyer on your own, your broker still earns a commission. This arrangement gives your broker the most incentive to spend time, money and energy marketing your property. Especially to the other agents in the area who can show your property to their buyer clients. Only with an exclusive right to sell agreement can you expect to get a full service marketing effort from your broker, since it is the only listing type that assures a broker will get paid for his marketing expense and efforts when the property sells.
Exclusive Agency Listing
This is similar to the right to sell listing, with the significant difference that you reserve the right to sell your property yourself and not pay the broker a commission. The broker only gets paid if your property is sold through a licensed real estate professional. If you find your own buyer and sell the property yourself, you pay no commission. On the face of it, this might sound like an attractive arrangement. But it's not a popular listing type with brokers, and for good reason. Under an exclusive agency agreement, the broker is exposed to the risk of putting forth considerable effort and expense marketing your property, only to come away empty handed. The attraction to the seller of this type of contract of course, is the possibility of finding their own buyer and not paying a commission. This puts the seller and broker in competitive roles, which usually isn't in the best interest of either party. Since the broker stands a good chance of not reaping any reward, it's unlikely that any effort or expense will be put into marketing an exclusive agency listing.
The open listing is a non-exclusive contract. It gives the broker permission to show potential buyers your property, and the broker will only earn a commission by bringing in a client who buys the property. Since the open listing isn't exclusive, sellers can sign these listing agreements with as many brokers as they want. The bottom line with an open listing is that no broker has any incentive to market the property at all. They won't even place the property on the local MLS service with an open listing. Further, it's up to the seller to field all phone calls and coordinate all showings etc…. Generally, the only people who use open listings are FSBO's (for sale by owner) who are willing to pay a partial commission to an agent for finding a buyer. You shouldn't expect any marketing or advertising at all with an open listing contract.
Also called the “one time” agreement. This is an agreement whereby a FSBO agrees to let an agent show the property to an interested client and pay a commission to the agent if that showing results in a sale. The purpose being to prevent a seller from letting an agent show the property, then deal directly with the client, to avoid paying any commission.