As you learn how to sell a house, there are some items in the contract that are negotiable. We have some industry standards in place that agents tend to present as fact. This is not the case. A good rule of thumb is that if there is a blank in the contract, you can negotiate on it. Here are three of the bigger items to keep in mind as you are going over the contract with the agent.
Please note that on the Residential Real Estate Listing Agreement Exclusive Right to Sell contract, all these items appear on page 2.
One way agents bring value to the table for you as a seller is their expertise in market conditions. Agents will be able to do what is called a Comparative Market Analysis (CMA) that looks at comparable properties that have sold or currently active on the market. Ideally, this CMA will include three sold properties and three active properties, all within quarter mile of your home. Listing price is determined by you despite how much the agent will push their own pricing recommendation. Be forewarned though, overpricing your property will be the worst marketing mistake you can make with it. The market will respond immediately to your listing if it is priced right. Generally, if you have not had a showing in seven days or an offer in 14 days, you home is overpriced, which means you will need to reduce it. As with everything else today, people’s attention spans are short so a house that has been a market for an extended period of time will lose the market’s interest. Nothing is more important than pricing the home correctly.
How long will the listing agreement be in place between you and the agent? Industry standards has the length of time of a listing agreement set at six months. This is not set in stone! As you think about how to sell a home, it is important to consider this aspect of the contract because if you are unhappy with the agent, you don’t want to wait six months for the term to end. Of course, you can terminate and default on the contract, but there is a clause in the contract where you would then be responsible for paying the broker the agreed-upon commission. Some agents will agree to terminate the contract if asked, but this is never guaranteed. It is important that you understand the term of the listing agreement.
Last but not least, how much do you want to pay the broker for helping you sell your house. Industry standards is 6 percent, but this is very negotiable. In fact, brokers have gotten in legal trouble for trying to control the commission rate in communities. They are not allowed to do it. In fact, you could negotiate a flat fee for the listing versus a commission, although be careful here as some brokerages will offer a flat fee and not provide the required services. It is against Texas law for a broker to list a property for you and then expect you to do all the work afterwards. By paying the broker, you are required to receive a certain number of minimum services.