Listing agreements: types, terms, and a definite termination date

What a listing does

A listing agreement employs a broker to perform services for a property owner. It sets the broker's authority and compensation; it does not itself sell the property or give the broker unlimited authority to accept an offer. A California agreement employing a broker to sell real property for compensation generally must be written and signed by the party to be charged.

Compare the types

An open listing is nonexclusive: the owner can employ multiple brokers and can sell independently without owing a brokerage commission. The broker who earns compensation under the agreement, ordinarily by being the procuring cause of the sale, receives it.

An exclusive-agency listing appoints one broker but reserves the owner's right to sell independently without owing that broker a commission. An exclusive-right-to-sell listing provides for the listing broker's compensation when the property sells during the term, even when the owner finds the buyer, subject to the agreement's terms. Read any expressly reserved exceptions.

A net listing describes compensation: the owner specifies a net amount, and the broker's compensation is the excess above it under the agreement. It is not simply another name for exclusivity. In California, it creates serious conflict and disclosure concerns; the broker must not conceal compensation or misuse the owner's trust. Commissions are negotiable, not fixed by law.

Specify the terms and the end

Identify the parties and property, listing price and authorized terms, services and marketing authority, compensation amount or method and earning conditions, and beginning and ending dates. Address any named-buyer exclusions and any limited protection clause for buyers introduced during the listing. A protection clause is not continuing authority to market indefinitely; its conditions matter.

California requires a definite, specified date of final and complete termination in an exclusive listing. Claiming, demanding, or receiving compensation under an exclusive agreement lacking that date is a disciplinary ground under Business and Professions Code section 10176(f). Both exclusive-agency and exclusive-right-to-sell arrangements are affected. 'Until sold' or 'until the owner cancels' is not a specified final termination date. Do not confuse the listing's expiration with the closing date of a buyer's purchase contract.

Marketing and compensation are separate

In California, placing a listing in a multiple listing service requires the seller's authorization or direction in the listing. The person entering information is responsible for statements they knew or reasonably should have known were false or inaccurate. Multiple listing service exposure does not itself change an open listing into an exclusive listing. Determine the listing type from the agreement, then apply its compensation and termination terms.