Long Listing Agreement Trap
By Michael Repka, Esq.
In many ways, the deck is stacked against the Sellers when they sign a listing agreement with a real estate agent. Irrespective of whether the agent decides to use the Peninsula Regional Data Service (“PRDS”) form or the California Association of Realtors® (“CAR”) form, the Sellers will find that the agreement is written by the Realtor® community and designed to favor the real estate agent’s interests.
A cursory review of either form will reveal a remarkable lack of specificity as to what the real estate agent is required to do to prepare and market a home for sale. Instead, the agent is granted wide latitude to do as much, or as little, as they would like.
Making matters worse, many local real estate agents ask for listing agreements that are 90 days long, and some even ask for longer! I believe that signing this type and length of agreement is against the best interest of the Sellers.
It is widely acknowledged that DeLeon Realty provides more marketing for our listings than any other brokerage in Silicon Valley. As a result, I get many unsolicited phone calls from the Sellers who are disappointed with the listing agent with whom they are working. Generally, the Sellers see the amount of marketing that we do for our listings, often competing properties, and feel shortchanged. I am often told that the Sellers’ requests for more marketing are rebuffed by the other agents.
The unfortunate truth is that the listing agreement that the Sellers sign with their agent is a binding contract between the brokerage and the Sellers. Brokerages often refuse to let clients out of a listing agreement even if the clients are extremely unhappy with the amount of marketing they have received. This is even true when the Seller says that the listing agent verbally indicated otherwise. In other words, the Sellers may find themselves held hostage until the end of an unreasonably long listing period.
The solution to this problem is for the Sellers to negotiate all of the details of the listing upfront. This should include a detailed list of all the marketing that the listing agent will provide, including, but not limited to, the size and frequency of newspaper ads, magazine ads, TV commercials, radio spots, direct mail pieces, and online activities. Additionally, the agreement should include a provision that the agent will cover the cost of staging and other services provided, if that is the agreement negotiated. The Sellers should seek specificity from the agent, not general promises to “give it 110%” or to reach out to the agent’s or brokerage’s “secret network” of buyers.
Finally, the Sellers should not sign listing agreements that are more than 45 days long. Hopefully, the agent will be able to sell the property within this amount of time. If the agent is unable to do so, the Sellers should be able to decide whether they are pleased with the level of service and marketing that they have received. If they are, the Sellers can simply extend the listing agreement at their own election. If the Sellers, however, are not satisfied, they should be free to switch to a brokerage that provides more.
The DeLeon Team provides a comprehensive list of marketing prior to execution of all for our listing agreements, and the agreement expires 39 days after we list on the MLS. Even if you decide not to list with us, our agreement can serve as a useful example of what should be in any agreement between you and the listing agent you select.