Types of Listing Agreements in Real Estate Explained
- LJ Woodard
- Dec 16, 2025
- 11 min read
Updated: Dec 30, 2025
Key Highlights
A listing agreement is a contract between you and a real estate agent that outlines the terms of your property sale.
The most common type of agreement is the exclusive right-to-sell, which ensures your agent receives a commission regardless of who finds the buyer.
An exclusive agency listing allows you to avoid paying a commission if you find the buyer yourself.
An open listing lets you work with multiple agents, but only the one who secures the buyer gets paid.
Net listing agreements are risky, create conflicts of interest, and are illegal in most states.
Types of Listing Agreements in Real Estate
Selling your home in San Diego is a significant financial decision, and choosing the right real estate agent is one of the first things you'll do. Before your agent can start marketing your property, you'll need to sign a listing agreement.
This document is a foundational contract in real estate that formalizes your partnership. It clarifies the responsibilities of both you and your agent, ensuring everyone is on the same page. Understanding this contract is key to a smooth and successful home-selling journey.
Understanding Listing Agreements in Real Estate
A listing agreement is a legally binding contract that gives a real estate agent the authority to act on your behalf to sell your property. Think of it as an employment contract between you, the home seller, and the brokerage. It details the agent's duties, the compensation they will receive, and the duration of the agreement.
Because every sale is unique, there are different listing agreements to suit various situations. These contracts define the relationship and expectations from the start, helping prevent misunderstandings down the road. Let’s explore the purpose of these agreements and what they typically include.
Purpose and Role of Listing Agreements
The primary purpose of a listing agreement is to create a clear, written understanding between a property owner and the real estate professionals they hire. This legally binding contract empowers the agent to market your home, show it to potential buyers, and handle negotiations in your best interest. It serves as protection for both parties.
For you as the home seller, the agreement ensures the agent is committed to finding a buyer for your property. It outlines exactly what services they will provide, from listing the home on the Multiple Listing Service (MLS) to coordinating showings.
For the agent, the agreement guarantees they will be compensated for their time, effort, and the money they spend on marketing your home. It establishes the terms of their commission, providing them with a reasonable expectation of payment once the sale is complete. This clarity helps foster a smoother, more professional transaction experience for everyone involved.
Key Elements Included in a Listing Agreement
Every listing agreement should contain several key elements to ensure it is comprehensive and protects all parties. While templates can vary, a standard contract will always detail the core terms of the professional relationship. This level of full disclosure is crucial for establishing trust and clarity from the outset.
These agreements must clearly state the specifics of the property, the responsibilities of the agent, and the financial terms. Essential components include:
Property Details: The legal description of the property, its address, and a list of features like the number of bedrooms and bathrooms.
Listing Price: The initial price at which the property will be marketed to potential buyers.
Agreement Duration: The length of time the contract is valid, which typically ranges from three to six months.
Commission Structure: The details of the real estate commission, including the percentage of the sale price that will be paid as the broker’s commission.
Understanding these components helps you know exactly what you're agreeing to before you sign.
The Most Common Types of Listing Agreements
When you decide to sell your home, you'll find there are several different types of listing agreements available. While a few options exist, most real estate transactions use one of four main contracts: the exclusive right-to-sell, exclusive agency listing, open listing, or net listing. Each type of agreement offers a different level of commitment and flexibility for both you and your agent.
Knowing the differences is crucial for making an informed decision that aligns with your selling goals. Let’s examine each of these common agreements.
1) Exclusive Right-to-Sell Listing Agreement
The exclusive right-to-sell listing agreement is the most common and widely used contract in real estate. When you sign this type of exclusive listing, you give a single agent the sole authority to market and sell your property for a specified period.
Under this arrangement, the listing agent earns their commission regardless of who finds the buyer. Even if you find a buyer yourself through a friend or family member, your agent is still entitled to the agreed-upon commission. This structure guarantees that the agent will be compensated for their marketing efforts and resources.
This guarantee is why it's the only type of listing most effective real estate agents will accept. It allows your agent to market your home to other agents who work with buyers, known as the buyer's agent, with confidence. The standard commission structure ensures all parties are motivated to achieve the best sale price.
2) Exclusive Agency Listing Agreement
An exclusive agency listing agreement gives a single real estate agent the right to sell your property, but with one key exception. If you, the seller, find a buyer on your own, you do not have to pay the agent a commission. This type of agreement appeals to sellers who want to be actively involved in finding a buyer and potentially save on commission fees.
However, this arrangement is not very popular with agents. Since there's no guarantee of payment, a real estate agent may have less incentive to invest significant time and money into marketing your home. They risk putting in a lot of effort only to have you find a buyer independently, leaving them with no compensation.
Because of this risk, you may find that an agent who accepts an exclusive agency listing might only place it in the Multiple Listing Service (MLS) and do little else. A good agent like LJ Woodard, who is confident in their ability to market a property and achieve a high sale price, will rarely agree to this arrangement.
3) Open Listing Agreement
An open listing agreement is a non-exclusive contract that allows you to work with multiple real estate agents at the same time. With an open listing, you can give any number of agents the right to bring potential buyers to your home. However, only the agent who successfully secures a buyer who is ready, willing, and able to purchase the property earns a commission.
This type of listing service also gives you the freedom to sell the home yourself. If you, the home seller, find a buyer without the help of any agent, you owe no commission to anyone. This flexibility might seem appealing, but it comes with significant downsides.
Because there is no exclusivity, no single real estate agent will put your home in the Multiple Listing Service or spend money on marketing efforts. Agents will only show your property if it happens to be a perfect fit for one of their existing clients and it's convenient to do so. An open listing offers very little incentive for agents to prioritize your sale.
4) Net Listing Agreement
A net listing agreement is structured very differently from other types of listings. In this arrangement, you, as the seller, set a minimum "net price" that you are willing to accept for your home. The agent’s commission is any amount the property sells for above that predetermined net price. For example, if you set a net price of $400,000 and the home sells for $450,000, the broker’s commission is $50,000.
While this might sound like a simple way to guarantee your desired profit, net listings create a major conflict of interest. The agent may be incentivized to prioritize their own earnings over your best interests. For instance, they might not present an offer that is close to your net price, holding out for a much higher one that benefits them more.
Due to these significant ethical concerns and the potential for abuse, net listings are considered unprofessional and are illegal in most states. Even where they are legal, they are subject to strict regulations. Sellers should rarely, if ever, choose a net listing agreement due to the high risk of undervaluing their property and creating an unfair commission structure.
Exclusive Right-to-Sell vs. Exclusive Agency Agreements
Choosing between an exclusive right-to-sell and an exclusive agency agreement is a common decision for sellers. Both grant an exclusive listing to a single real estate agent, but the key difference lies in the broker’s commission. Your choice of agreement type directly impacts your agent's motivation and what happens if you find a buyer on your own.
Understanding these differences is essential for selecting the listing agreement that best suits your goals and level of involvement in the selling process. Let's compare these two popular options.
Key Differences and How Each Impacts Sellers
The main distinction between an exclusive right-to-sell and an exclusive agency listing is the condition under which the commission is paid. This single difference can significantly affect the listing agent's commitment and your potential to save on commission fees. In an exclusive agency listing, you reserve the right to sell the property yourself and avoid paying the commission.
With an exclusive right-to-sell agreement, the agent is guaranteed a commission no matter who finds the buyer, which motivates them to invest more in marketing to get the best possible sale price. This guarantee often leads to a more dedicated effort from the agent.
Here’s a simple breakdown of the differences:
Feature | Exclusive Right-to-Sell | Exclusive Agency Listing |
Commission Guarantee | The agent earns a commission regardless of who finds the buyer. | An agent earns a commission only if they or another agent finds the buyer. |
If Seller Finds Buyer | Seller still pays the full commission. | Seller does not pay a commission. |
Agent Motivation | High. The agent is guaranteed compensation for their efforts. | Moderate. The agent risks investing time and money with no return. |
Seller's Role | Primarily relies on the agent for the sale. | Can actively seek a buyer to avoid commission fees. |
Advantages and Considerations for Agents and Sellers
When selecting an exclusive listing, both sellers and agents have different factors to consider. A real estate agent will almost always prefer an exclusive right-to-sell agreement because it secures their compensation, allowing them to fully commit their resources to marketing the property. This type of agreement aligns their efforts with the interests of their clients to get the best price.
For sellers, the choice is less clear-cut. An exclusive agency listing offers the tempting possibility of saving thousands on commission. However, this comes at the cost of potentially reduced marketing effort from the listing broker.
Here are some key considerations for sellers:
Your Network: Do you have a large personal or professional network and believe you can find a buyer independently?
Agent Commitment: Do you want an agent who is fully invested and will use a comprehensive marketing strategy?
Market Conditions: In a hot seller's market, an agent might be more willing to consider an exclusive agency agreement.
Ultimately, the best type of agreement depends on your confidence in your ability to sell versus your desire for a dedicated agent to handle the entire process.
Open Listings and Net Listings: What Sellers Should Know
While less common, open and net listing agreements are two other options sellers might encounter. However, both come with significant drawbacks that you should be aware of. The open listing agreement often results in minimal marketing effort from agents, while the net listing agreement is fraught with ethical concerns and potential conflicts of interest.
Many real estate professionals avoid these agreements due to their unpredictable nature and the risk of violating the industry's code of ethics. Let’s look at the pros, cons, and risks associated with each.
Pros and Cons of Open Listing Agreements
An open listing agreement offers maximum flexibility to a seller, which can be its main advantage. You are not tied to a single agent and can try to sell the property on your own to avoid all commission fees. However, this flexibility comes at a high cost in terms of agent service and market exposure.
The cons of an open listing often outweigh the pros. Since no single real estate agent has an exclusive right to the commission, there is very little incentive for any of them to invest in marketing your property. Your home will not be listed on the Multiple Listing Service (MLS), which dramatically reduces its visibility to potential buyers.
Consider these points before choosing an open listing:
Pro: Total flexibility to work with multiple agents or sell on your own.
Pro: No commission is due if you find the buyer yourself.
Con: No agent will spend money on marketing or advertising.
Con: Your property will not be listed on the MLS, limiting exposure.
Con: Can lead to less agent dedication and potentially a lower sale price.
Risks and Legal Concerns with Net Listing Agreements
Net listing agreements are widely considered the riskiest type of listing contract due to major legal and ethical concerns. The core problem is the inherent conflict of interest it creates. The agent's commission is tied to exceeding your minimum price, which can incentivize them to prioritize their profit over your best interest.
For example, an agent might not present a reasonable offer if they believe a much higher one could come along, increasing their payout. There's also a risk that a seller who is unaware of their property's fair market value could set the net price too low, resulting in an unfairly large commission for the agent.
Because of these issues, net listings carry significant risks:
They are illegal in most states due to ethical concerns.
They are prohibited by the National Association of Realtors' Code of Ethics.
They cannot be listed on the Multiple Listing Service (MLS).
They can lead to lawsuits if a seller feels they were misled.
Agents who use them risk losing their real estate license.
Conclusion
In summary, understanding the various types of listing agreements in real estate is essential for both sellers and agents. Each agreement comes with its own set of advantages, considerations, and potential challenges.
Whether you opt for an exclusive right-to-sell, exclusive agency, open listing, or net listing, being informed will enable you to make better decisions that align with your goals. By choosing the right type of listing agreement, you can navigate the complexities of the real estate market more effectively.
If you have any questions or need assistance in selecting the best listing agreement for your needs, don’t hesitate to get in touch with One Percent Listing Group Inc.!
Call - (619) 794-9966
Listing Agreements FAQ
How long do typical listing agreements last in real estate?
A typical listing agreement in real estate lasts between three and six months. The duration of this legally binding contract can be negotiated between you and your real estate agent. Shorter periods may be possible in a fast-moving market, while longer terms might be necessary for unique or high-value properties.
Are there risks for agents or sellers with net listing agreements?
Yes, a net listing agreement carries significant risks for both parties. For sellers, there is a major conflict of interest, as the agent may prioritize a higher broker’s commission over the seller's best outcome. For agents, using a net listing is illegal in most states and can lead to license loss.
Can a seller switch types of listing agreements during a sale?
Switching the type of agreement during a sale is possible but not simple. It would require the current listing agreement to be terminated by mutual consent between the home seller and the real estate agent. You would then need to sign a new contract with the desired terms for the sale of their home.
Do listing agreements vary by state or region in the United States?
Yes, listing agreement regulations can vary by state. The most notable difference is the legality of net listings, which are banned in most states but permitted under strict regulations in a few, like California and Texas. Most other terms are guided by standards set by organizations like the National Association of Realtors.
Are net listings allowed in MLS?
No, net listings are not allowed on the Multiple Listing Service (MLS). The MLS has rules that prohibit this type of listing agreement due to the potential conflicts of interest and the lack of a specific listing price. This policy aligns with the National Association of Realtors' Code of Ethics.
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