This form is used by a seller’s agent when entering into the employment of an owner of a property as their sole agent for a fixed period of time, to list the property for sale, locate a buyer and sell the property.
Authority to act on the client’s behalf
A listing agreement is a written employment arrangement between a client and a licensed real estate broker regarding real estate services. On entering into a listing agreement, the broker and their agents are retained and authorized to diligently perform real estate related services on behalf of the client in exchange for payment of a fee. [Calif. Civil Code §1086(f); see RPI Form 102-104 and 110-112]
The client retaining a broker may hold an ownership interest in real estate, which the client seeks to:
- sell [See RPI Form 102 and 102-1];
- lease [See RPI Form 110]; or
- encumber as collateral for mortgage financing [See RPI Form 104].
Further, the client retaining the services of a broker may be seeking to acquire an interest in real estate as a:
The person employed by a client to provide real estate services in expectation of a fee is a licensed real estate broker. Likewise, if a dispute arises with a client over the client’s failure to pay an agreed-to fee, the broker needs to be employed under a written listing signed by the client to pursue collection.
A real estate agent employed by the broker may obtain a listing, but the agent does so while acting on behalf of the broker. The agent has no independent right to enter into or enforce the listing agreement in their name.
The agent’s right to share in a fee
The agent of a broker has a right to a fee on transactions based on the agent’s written employment agreement with their broker, not under the separate listing agreement the broker has with the client. Through the broker-agent employment agreement, the agent is entitled to share in the fees actually received by the broker on transactions in which the agent participates. [See RPI Form 505 and 506]
A licensed agent representing a broker acts as an agent of the broker. As the broker’s agent, the agent performs on behalf of the broker (as well as the client) all the activities the broker has been retained by the client to provide. Further, an agent providing real estate related services on behalf of a client may not do so independently of their broker. Thus, an agent employed by a broker is referred to as “the agent of the (client’s) agent.” Thus, the agent is acting as an agent of the agent (their employing broker). [CC §2079.13(b)]
The promise of diligence in exchange for a fee
The listing agreement sets the scope of services the broker is authorized to perform while representing the client. The listing also authorizes the broker to serve as the client’s representative in the negotiation of a real estate transaction with others.
Further, the listing contains the client’s promise to pay a fee to the broker. This promise is given in exchange for the broker’s promise to use diligence in the broker’s efforts to meet the client’s objectives, known as fiduciary duties.
Editor’s note — The use of diligence is distinguished from a “best efforts” standard for broker performance under an open listing.
Though a written listing agreement is required to enforce collection of a fee, an oral agreement to perform brokerage services on behalf of a client imposes an agency law obligation on the broker and their agents to act as fiduciaries — no differently than had a writing existed.
An agreement employing a broker to purchase or sell real estate, lease a property for over one year or arrange mortgage financing is controlled by contract law. For a broker to enforce a promise from a client to pay a fee, the fee agreement needs to be:
- in writing; and
- signed by the client. [CC §1624(a)(4)]
Types of listing agreements
A variety of listing agreements exist, each employing and authorizing a broker to perform real estate related services under different conditions. The variations usually relate to:
- the extent of the broker’s representation;
- the type of services to be performed by the broker and their agents; and
- the events which trigger payment of a fee. [See RPI Form 102-104 and 110-112]
Despite the application of various agreements to the type of property described in the listing, all listings fall into one of two general categories:
- exclusive; or
Under an exclusive listing, a broker receives the sole right to represent:
- an owner by marketing a property for sale or lease and locating a qualified buyer or tenant for the property [See RPI Form 102 and 102-1];
- a buyer or tenant by locating suitable property [See RPI Form 103 and 103-1]; or
- an owner or lender to mortgage a property.
An exclusive listing has a specified period of employment set by a mandated expiration date of the employment, such as 90 or 180 days after its commencement. If the broker fails to include an expiration date in an exclusive listing, they face disciplinary action by the California Bureau of Real Estate (CalBRE) on a complaint. [Calif. Business and Professions Code §10176(f)]
Two types of exclusive employment agreements for buying and selling real estate exist:
- an exclusive agency listing for a seller or buyer; and
- an exclusive right-to-sell or right-to-buy listing agreement [See RPI Form 102-104].
Both types of exclusive listings establish the broker and their agents as the sole licensed real estate representatives of the client. However, these variations are distinguished by whether or not the broker is entitled to a fee when the property is sold or located solely by the efforts of the client.
Under an exclusive agency listing, the broker does not earn a fee when the client, acting alone and independent of any other broker or the listing broker, accomplishes the objective of the employment, i.e., selling the listed property or locating and buying the property sought.
Conversely, under the fee provision in an exclusive right-to-sell/buy agreement, the broker earns a fee no matter who produces the buyer or locates the property sought under the listing during the listing period. This is the case whether it is the client, the seller’s broker or another broker or representative of the client who produces a buyer or locates a property. [CC §1086(f)(1)]
Analyzing the exclusive employment
first tuesday’s exclusive right-to-sell listing agreement is used by brokers and their agents when soliciting employment by a prospective seller of real estate. It is prepared and submitted to the seller as the broker’s offer to act as the seller’s exclusive real estate agent to:
- market the seller’s property;
- locate a ready, willing and able buyer; and
- negotiate a sale. [See RPI Form 102]
Each Section in the exclusive right-to-sell listing agreement has a separate purpose and need for enforcement. The sections include:
- Brokerage services: The employment period for rendering brokerage services, the broker’s due diligence obligations and any advance deposits by the seller (Sections 1 and 2).
- Brokerage fee: The seller’s obligation to pay a brokerage fee, the amount of the fee and when the fee is due (Section 3).
- Conditions: Authority for the broker to receive a buyer’s purchase offer, accept a good-faith deposit, enter into fee-splitting arrangements with brokers representing buyers and enforce the listing agreement (Section 4).
- Property description and disclosures: Identification of the listed real estate and any personal property that is also being sold, the terms of existing financing and the conditions of the property (Sections 5, 6 and 7).
- Sales terms: The price and terms sought by the seller for the sale, exchange or option of the property (Sections 8, 9, 10 and 11). Signatures and identification of the parties: On completion of entries on the listing form and any attached addenda, the seller and broker or their agent sign the document consenting to the employment. [See RPI Form 102]
first tuesday’s exclusive right-to-sell listing agreement affords a real estate broker the greatest fee protection for their efforts.
Under an exclusive right-to-sell agreement, the owner relinquishes their right to list the property with other brokers or defeat the seller’s broker’s entitlement to compensation by selling the property themselves, as occurs under an exclusive agency listing or open listing.
Exclusive right-to-sell listings give a broker and their agents the greatest incentive to fulfill their fiduciary duty and work toward attaining the client’s goal of locating a buyer who acquires the property. Here, the seller’s broker does not compete with the client to sell the property — they work together to achieve the sale.
Buyer’s brokers know that sellers who enter into exclusive right-to-sell listings are fully committed to working with brokers. Also, sellers who retain competent agents are counseled on prices of comparable properties and current market conditions. Thus, the seller of a listed property is more likely to accept a reasonable offer.
In turn, buyer’s brokers are comfortable exposing their clients to properties listed exclusively by other brokers.
Preparing the seller’s listing agreement
The following instructions are for the preparation and use of the Seller’s Listing Agreement, RPI Form 102, with which a seller employs a broker as their exclusive agent to market a property for sale and locate a buyer.
Each instruction corresponds to the provision in the form bearing the same number.
Editor’s note — Check and enter items throughout the agreement in each provision with boxes and blanks, unless the provision is not intended to be included as part of the final agreement, in which case it is left unchecked or blank.
Enter the date and name of the city where the listing is prepared. This date is used when referring to the listing agreement.
1. Retainer period:
1.1 Listing start and end date: Enter the date the brokerage services are to commence.
Enter the expiration date of the employment period. The expiration needs to be set as a specific date on which the employment ends since an exclusive listing is being established.
1.2 Broker’s/agent’s duty: States the broker and their agents promise to use diligence in their effort to locate a buyer for the listed property. The agency duties a broker and their agents owe the seller are always implied, if not expressed in writing.
2. Seller’s deposit:
2.1 Advance fees and costs: Enter the amount of deposit negotiated to commence the brokerage services.
Fill out and attach the Listing Package Cost Sheet addendum detailing the services to be rendered or costs to be incurred and charged against the deposit. [See RPI Form 107]
3. Brokerage fee:
3.1 Fee amount: Enter the fee amount negotiated to be paid as a percentage of the sales price or a fixed dollar amount. This amount will be paid when any one of the following conditions occur triggering payment:
a. Fee on any sale: States the brokerage fee is earned and due on 1) presentation during the listing period of an offer for the price and terms sought under the listing, or 2) any sale, exchange or option of the property agreed to by the seller during the listing period.
b. Fee on withdrawal: States the brokerage fee is earned and due if the seller, without the broker’s consent, withdraws the property from the market or significantly interferes with the broker’s ability to market the property.
c. Fee on termination: States the brokerage fee is earned and due if, during the listing period, the seller terminates this employment.
d. Safety clause fee: States the brokerage fee is earned and due if, within one year after the listing expires, a prospective buyer whom the broker or broker’s agent negotiated with during the listing period and whose name the broker registered with the seller on expiration of the listing, negotiates to buy, exchange for or acquire an option to buy the listed property, and the negotiations culminate in a binding agreement with the seller. Within 21 days after expiration of the listing period, the broker needs to provide the seller with a list of the prospective buyers. [See RPI Form 122]
3.2 Replacement property fee: States an additional fee is earned and due, based on the same terms as the fee for a sale of the listed property if, through negotiations involving the broker, the seller acquires replacement property, such as occurs in a IRS §1031 tax-exempt transaction.
3.3 Hourly fee: Enter the negotiated dollar amount for the broker’s per-hour fee. The hourly fee is earned for time spent on behalf of the seller if the property is not sold, exchanged or optioned after a diligent effort is made to market the property and locate a buyer. Enter the maximum amount the broker can earn on a per-hour basis.
4. General provisions:
4.1 For Sale signs: Authorizes the broker to place For Sale signs on the property and publish information (in multiple listing services (MLSs), classified ads, broadcasts, flyers, etc.) regarding the property described in the listing.
4.2 Authority to share fees: Authorizes the broker to cooperate with other brokers and share with them any fee paid on any transaction.
4.3 Authority to accept deposits: Authorizes the broker to work with buyers to obtain offers and receive good-faith deposits.
4.4 Handling offers: Authorizes the broker to deliver offers from buyers to the seller in person, by electronic transmission (fax or email) or by mail.
4.5 Conflict of interest: States the broker may have or will contract to list comparable properties or represent buyers seeking comparable properties during the listing period.
4.6 Mediation provision: Provides for the parties to enter into non-binding mediation to resolve a dispute remaining unsolved after 30 days, prior to filing an action.
4.7 Attorney fees: Entitles the prevailing party to attorney fees if litigation results from the seller’s failure to pay fees or the broker’s breach of an agency duty, unless the prevailing party proceeded with litigation without first offering to enter into mediation.
4.8 Choice-of-law provision: States California law will apply to any enforcement of this employment.
5. Real estate:
5.1 Type of real estate: Enter a brief description of the type of real estate to be sold, such as apartment, commercial, office, industrial, land or single-family residence (SFR), its legal description or common address, and the vesting of its title.
5.2 Encumbrances of record: Enter all financing of record which are liens on the real estate, including information on amounts, payments, interest rates, impounds, due dates and type of lenders.
Mortgage information submitted to the MLS or included in a marketing (listing) package gives a prospective buyer the alternative of making an offer which includes the existing mortgage as part of the purchase price.
6. Personal property included:
6.1 Description: Enter a brief description of any personal property included in the price. If numerous items or inventory are included in the sale, prepare and attach an exhibit for inventory/personal property and refer to it by entering “See attached Personal Property Inventory – Transferred with Real Estate.” [See RPI Form 256]
6.2 Encumbrances: Enter the balance, terms of payment, interest rate, due date and the name of the lender on any financing secured by the personal property.
7. Listing package addenda: Check the appropriate boxes and attach each addendum to be prepared or reviewed by the seller for inclusion in the listing package. The addenda will contain the seller’s representations about the property needed by the broker to properly market the property to locate and induce prospective buyers to purchase the property.
Editor’s note — The Agency Law Disclosure is mandated to be included in the seller’s listing agreement regarding one-to-four unit residential property, the sale or purchase of commercial property and the lease of commercial property with lease terms exceeding one year. Failure to include the disclosure may subject the agent to a penalty of a lost fee on the resulting sale. The applicable federal and California residency and withholding disclosures are also most prudently presented at the listing stage since the information is known to the broker and may be of financial concern to the seller. [See RPI Form 305]
The other addenda listed are disclosures about the property which are prepared by the seller and received by the broker to be included in the listing package for delivery to prospective buyers so they will be informed of the property’s condition before the seller accepts an offer or makes a counteroffer.
7.1 Non-listing package addenda: Check the appropriate boxes and attach each addendum prepared by the broker and reviewed with the seller to disclose the costs the seller will incur on the sale of the property.
8. Sale terms:
8.1 Price/terms sought: Enter the dollar amount of the price sought for the property by the seller.
a. Cash price: Check the box to provide for the price to be paid in cash on closing. The seller is to discharge and clear all liens from title, either themselves or through escrow.
b. Mortgage assumption: Check the box if the seller will allow a buyer to pay a cash down payment (to cash out the seller’s equity) and assume the mortgage(s) referenced in section 5.2.
c. Carryback financing: Enter the amount of the down payment the seller will accept. Enter the amount of any existing financing the seller will allow a buyer to assume. Enter the amount, terms of payment, interest rate, the number of years for monthly amortization payments, and the due date for carryback financing the seller will accept from a creditworthy buyer.
8.2 Sale and closing costs: Check the box for each item of expense the seller will incur to market the property. Prudent practice dictates the seller proceed to promptly prepare disclosures and authorize the inspections, reports or clearances needed for the broker to properly market the property and inform prospective buyers about its condition before the seller enters into an agreement to sell the property.
9. Exchange terms:
9.1 Acquisition property: Enter the type of property, its location (city, county or state) and the dollar amount of equity and debt on replacement property the seller is willing to acquire with the net proceeds from a sale of the listed property or by an exchange of its equity.
10. Option terms:
10.1 Seller will option: Enter the amount of option money the seller will accept to grant an option to a buyer. Enter the period during which the option may be exercised.
11. Other terms: Enter any special provision to be included in the listing.
11.1 Vacating the property: Enter the date or event on which the seller (or a tenant) will vacate the premises, such as “the close of escrow.”
11.2 Additional terms: Enter any additional terms stipulated by the seller.
Broker’s/Agent’s signature: Enter the date the listing is signed. Enter the broker’s name and CalBRE license number. Enter any agent’s name and CalBRE license number. Enter the broker’s (or agent’s) signature. Enter the broker’s address, telephone and fax numbers and email address.
Seller’s signature: If additional sellers are involved, check the box, prepare a Signature Page Addendum form referencing this listing agreement, and enter their names and obtain their signatures until all sellers are individually named and have signed. Enter the date the seller signs the listing and the seller’s name. Obtain the seller’s signature. Enter the seller’s address, telephone and fax numbers and email address. [See RPI Form 251]
Form navigation page published 07-2015.
Last revised 12-2014.
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