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Selling your home can stir up a mix of excitement and uncertainty. Every decision seems wrapped in contracts, listing agreements, commissions, and unfamiliar terms.
Whether you’re preparing for a PCS, considering selling a rental home, or simply looking to downsize, understanding the different types of real estate listing agreements and your options allows you to set clear expectations and goals and can make all the difference between a smooth sale and a stressful one.
The good news? You don’t need a law degree or a magnifying glass to make sense of it all. Let’s walk through the different listing agreements and key considerations for each, your options as a seller to include how to choose the right real estate agent or pursue a For Sale By Owner (FSBO), so you can approach the selling process with the knowledge and confidence to meet your goals.
What Is a Listing Agreement?
A listing agreement is a legal contract between you, the seller, and a real estate agent that defines the terms of the sale. It gives the agent the legal right to market the home, represent your interests in the sale, and earn a commission, based upon the terms set in the contract. It is the working, legally binding document that sets expectations, including how long the home will be listed and what happens if you find your own buyer.
There are actually several types of listing agreements, and the one you choose determines who gets paid, how your home is marketed, and what options you have if your plans change.
The Main Types of Real Estate Listing Agreements
Understanding the different listing agreements is the first step toward feeling confident and in control of your home sale, as each one shapes the way your home will be marketed and sold.
Exclusive Right-to-Sell Listing
Under an exclusive right-to-sell listing agreement, you select a dedicated (exclusive) real estate agent, and your chosen agent then has full authority to represent your home for the duration set per the listing agreement.
Your agent will steer the selling process, including marketing, adding the home to the MLS database, arranging showings, communicating with the buyer’s agent and negotiations, and the closing process. Additionally, no matter who brings the buyer to the table with an offer (you, your neighbor, or another agent), your listing agent earns a commission as defined in the listing contract.
The exclusive right-to-sell is the most common listing agreement, as it gives your agent motivation to market your property aggressively. Once the property sells, the agent earns their commission.
Exclusive Agency Listing
An exclusive listing agency listing is like the above exclusive right-to-sell, with one key difference: if the seller finds a buyer themselves and brings the offer to the table, they do not owe a commission to the listing agent.
The seller may sign an exclusivity agreement with either one agent or the agent’s brokerage to list the property. The major drawback for an agent is the potential loss of commission if the seller finds a buyer independently. For that reason, exclusive agency listings are less common than exclusive right-to-sell agreements, where a listing agent is guaranteed a commission, and some agents may refuse to work with them.
Open Listing
An open listing is a rather rare listing agreement option, as it is essentially a “may the best agent win” scenario. A seller may work with multiple agents at once, without exclusivity, and the agent who actually brings the buyer earns the commission.
Open listings are not common in residential sales because of the reduced motivation for agents to invest significant effort marketing a property that is not exclusively “theirs” to sell.
Net Listing
In a net listing agreement, the seller specifies a minimum price they would like to receive from the sale, and any amount over that price is considered the real estate agent’s commission. Net listing agreements present notable ethical dilemmas, such as pressuring a buyer to pay a higher price to “win” the bid, and thus, increase a selling agent’s commission. For that reason, net listing agreements are illegal in most states, with the current exceptions of California, Texas, and Florida, and even then with strict stipulations.
Additionally, if a homeowner doesn’t know the actual value of their home, a real estate agent could take advantage of this lack of knowledge with a net listing agreement. For example, in urging a seller to list a home at $400,000 with a net listing (but knowing the home will easily fetch a $600,000 offer), an agent pockets $200,000 as commission, instead of a more standard three percent listing commission (3% of $400,00 and $600,000 is $12,000 and $18,000, respectively). For this reason, net listings are often considered predatory.
Dual Agency Listing
A dual agency listing occurs when a single agent represents both the buyer and the seller in the same transaction. This may happen when an unrepresented buyer approaches a listing, but then asks the listing agent to submit an offer on the buyer's behalf.
This can present a significant ethical dilemma for the seller’s listing agent, as the agent is trying to serve two parties with opposing interests. Dual agency listings are illegal in many states and tightly regulated in the few states that allow it.
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For Sale By Owner (FSBO)
In a FSBO listing agreement, the seller handles the listing and sales process themselves without their own listing agent. This type of listing is often chosen to save on agent commissions, but requires the seller to manage or facilitate the majority of the process, including: pricing, marketing, showings, negotiations, navigating contracts and closing.
The seller manages the creation of a purchase agreement and coordinates with a title company directly for closing or may elect to use attorney services. It is possible to list your home on the MLS, but there is usually a fee, and if a buyer uses the MLS to buy your home, you may have an additional buyer’s agent commission.
Pocket Listing
It is also worth noting that some sellers may pursue what is known as a “pocket listing.” A pocket listing isn’t quite a formal listing agreement, but more of a strategy where a seller identifies an agent to market their home privately to select buyers rather than publicly listing the home on an MLS.
Sellers may use this approach to maintain privacy, quietly gauge market interest, or offload a property quickly, particularly if an agent has already demonstrated that they have a network of qualified, ready buyers, such as investors, looking to close quickly on available listings.
Pocket listings aren't illegal, but rules vary by state and MLS. Some states limit how long a property can be withheld from the MLS or require it to be disclosed publicly within a set timeframe.
Learn more: What Are Pocket Listings? A Guide for Homebuyers and Sellers
Understanding Commissions and Listing Terms With an Agent
Before you sign a listing agreement, ensure that you fully understand what type of listing agreement you'll be signing as you are entering into a legal contract.
Key Listing Terms to Scrutinize
- What is the agent’s commission, and how is it determined? As a seller, do you wish to split the commission costs, where the seller pays only their portion of the listing and a buyer is responsible for compensating their own agent? Or will a seller offer both a seller’s and buyer’s agent commissions?
- How long is the listing term?
- What happens if the home doesn’t sell within the listing term? Is there a “holdover or carry-over clause” that means the agent still earns a commission within a certain period (for example, 30 days) after the listing expires?
- What services will the agent or agency be providing, and are those services included in the commission? If not, how will you be billed? Ask if the following are included: professional photography, digital or physical staging (if needed), and additional online promotions. Verify that any services promised are written verbatim into the terms.
- Is dual agency prohibited in your state? What happens if an unrepresented buyer approaches the sale and attempts to have the seller’s agent (your agent) prepare a purchase offer?
- How will the listing agreement be ended? And under what conditions, particularly if you are not happy with the agent’s services or communication, or the agent cannot meet the terms of the listing agreement?
Transparency is key. A friendly agent will walk you through every clause in your listing agreement in plain language before you sign, to ensure all parties are prepared for a successful listing.
TIP: Realtor or real estate agent? What’s the difference? A real estate agent is a licensed professional who helps clients buy, sell, or even rent property, while a “Realtor” is a real estate agent who is also a member of the National Association of REALTORS (NAR).
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How to Choose a Real Estate Agent
Finding the right real estate professional is as important as picking the right listing agreement. Here’s how to start your search.
Ask for Referrals
Friends, neighbors, or colleagues, especially in the military community, are a goldmine of firsthand experience. Tap into that network to go beyond simply searching “sell my home” and “a real estate agent near me” into the best agent for you.
Check Local Expertise
An agent familiar with your specific area will know what comp properties are selling for, what features buyers want, and how to position your listing effectively.
Interview More Than One Agent
Don’t hesitate to interview several agents before signing a listing agreement. A reputable agent will expect and encourage interviews before deciding, as they too want to work with great clients.
Communication and Style
Setting communication expectations from the beginning eases stress for both you and your agent, and some agents may be a better style fit for your own personality. For example, if you are a first-time seller, does the agent seem accommodating and patient, or is their style direct and hard-charging? Do you discover that you have a style preference?
Define Your Priorities
Your agent will need to know what is most important to you as you sell your home. Is there a timeline crunch? Are you unwavering in your budget or other non-negotiable items for the sale? What will their listing approach be to meet your priorities?
Agent or Team?
Will you be working solely with your agent, or will their assistants or partners be your primary point of contact?
What Percentage of Their Clients Are Military?
Military sellers often face different challenges from their civilian counterparts when it comes to selling a property, notably the crunch of a timeline revolving around a PCS. Look for an agent who understands this stressor and can offer a strategy to meet your needs.
See: How a Military Relocation Professional Makes Your PCS Move Easier
The energy you invest in researching the right selling strategy for you is time-consuming but worth it. That may be a combination of finding both the best-fit real estate agent and listing agreement, or you may decide that you want to pursue a FSBO.
How to List on the MLS if You Choose For Sale By Owner (FSBO)
As mentioned, another option to sell your home is to opt for a For Sale By Owner (FSBO). The most critical factor to execute a successful FSBO listing is to approach the sale as if you are a rock-star agent and bring your A-Game early.
FSBOs can absolutely be successful, but they are not without work. You will essentially be functioning as your own agent and competing against other sellers and, essentially, other listing agents.
If you will be pursuing a FSBO to list your home, you can list the home on the MLS, but the work will be upon you to do so.
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Prepare the Home
Clean and declutter, particularly if you will still live in the home while showing it. If the home will be empty, consider staging or even virtual staging. Repair any damage or price the home accurately to reflect any work or updates needed.
Research Flat-Fee MLS Services
Service packages may vary. You’ll need to choose a package that fits your needs, from a basic MLS listing to more comprehensive options. Confirm the service provides access to the correct local MLS in your area before signing an agreement to list.
Write Your Home Listing
Imagine yourself in a buyer’s shoes. What are they looking for? What did you look for in your own home-buying search? And how does your home meet that search? Rich keywords stand out when writing a home listing, such as chef-grade appliances, spacious living areas, well-tended landscaping with mature trees, natural light, and move-in ready.
Read: How to Create an Unforgettable Home Listing
Provide High-Quality Photos
Pictures are arguably the most significant part of your listing. High-quality photos grab attention. Likewise, grainy, dark, or poorly taken photos repel attention, along with buyer’s interest.
Expect and Submit Required Disclosures
You will need to provide a seller’s disclosure that lists any known material facts and issues about the property, most commonly:
- Structural, mechanical or environmental issues, such as the condition and previous damages of major systems, such as the roof, electrical, plumbing, and heating/cooling systems.
- Past issues, including previous fire, water, pest, and insect activity (termites).
- Hazardous conditions, particularly lead-based paint or radon. Some states will require current environmental testing, and require an independent inspector and report (such as a radon test, or physical swabs for lead paint).
- Other conditions. Are there any other known material facts that could impact a buyer, such as property line disputes, or neighborhood nuisances?
Manage the Listing
Ensure you understand the timeline of the flat-fee MLS listing. Is the validity period 30 days, 90 days, or is it billed until cancellation?
Potential Seller Mistakes (and How to Avoid Them)
Selling a home can bring an unexpected swing of emotions, from grief and sadness in departing with a beloved first home, to giddiness at the anticipation of a sale in a hot market. Sometimes, these emotions can set the stage for home selling mistakes. Here are a few pitfalls to sidestep.
Signing Too Quickly
You don’t have to sign with the first agent that hands you a pen. Take your time to review the listing terms and compare your options.
Not Reading the Fine Print
Pay careful attention to termination clauses, communication policies, and commission terms. You don’t want any unwelcome surprises later.
Overpricing the Home
It’s tempting to aim high, but overpricing can make your home sit on the market. Your agent should have a data-backed pricing strategy that has taken the condition of the home and comparable recent sales into consideration when recommending a list price. If you’re pursuing a FSBO option, research comparable properties in your area, and price accordingly.
Ignoring Curb Appeal, Clutter, and Cleanliness
First impressions matter. Even small curb appeal updates, such as fresh mulch, clean windows, or a new doormat, can boost your listing photos and attract more buyers.
The Bottom Line of Real Estate Listing Agreements
Choosing the right type of listing agreement is about more than just paperwork. If you choose an agent-based approach, it’s about knowledge as well as partnership. But a FSBO option could be the best fit for your goals and needs.
With the right information and approach, you can confidently navigate the selling process, and MilitaryByOwner has home selling resources to guide you every step of the way!
By Kristi Adams
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