So I'm looking around the net for some contracts I can use later on. I found this site that explains the 3 different types of listing agreements we have here in the Philippines. I think people should read and understand these so they'll have a better idea on how to interact with brokers, and what makes us tick.Exclusive Right To Sell
Exclusive Right To Sell means that no matter who buys the property, that broker will get the commission. There is a really good reason why most listings are Exclusive Right to Sell. Think about it: If I spend my money and time doing the work to sell your property, but I don't have the security that I'll be paid for it, then, let's just say I'm not going to be so enthusiastic about spending that money and time, especially if any prospective buyer can just go straight to the seller and I end up getting nothing for my efforts. Some brokers only accept exclusive right to sell listings. Other brokers will only agree to do so on an upfront fee basis, as compared to waiting until the property actually sells. If you want a good broker to devote his/her full energy to selling your property, this is the kind of listing contract you should offer. Before you condemn brokers for acting like money-hungry sharks, ask yourself how hard you would work at your job when the conditions are: maybe get paid, maybe not. Makes sense now, doesn't it?
Exclusive Agency To Sell
Exclusive Agency means that you won't pay commission if you sell it yourself, but you will pay if your broker (known as the Seller's Broker), or some other broker (known as the Buyer's Broker), brings you the buyer. Any broker with a buyer is presumed to have gotten access to your property's information through your broker's marketing efforts. Thus, the commission is typically shared between the Seller's Broker and the Buyer's Broker. This listing contract DOES allow for anybody to just knock on your door and buy the property directly from you, despite the fact that your broker's efforts were what alerted them to the existence of the property in the first place. Since most brokers have been burned on this one or know someone who has, few, if any, may want to accept this type of contract without requiring you to at least pay for their marketing expenses. So that's really something you might want to discuss with your broker. If you really want to escape having to pay the agent, count on being on your own through the negotiations and titling process. A very large proportion of prospective buyers who will go around your broker to negotiate with you directly could be sharks, unqualified buyers, or possess some other characteristic that's going to cost you a large amount of money, time and frustration. Why not get your broker to filter those out? That's part of what we get paid for, anyway.
Open Listing
Open Listings are listings where there is no single broker that has a right to get paid. Of course, no one has the responsibility to act on the your behalf, either. No one will market your property except yourself, no one will watch out for your best interest except yourself, and no one to help you along the way except yourself. An open listing can occur when a broker agrees to market or advertise your property without the benefit of an exclusive agency or an exclusive right to sell. In other words, there's no guarantee that the broker will really ever be the one to sell it, so he/she might not really put much effort into selling it. You might as well advertise it yourself. The bottom line with an open listing is that no broker has any incentive to market the home at all. The typical market practice is for sellers to pay the commission, so buyers can opt to get a broker who will look for properties for them. While there's nothing wrong with wanting to sell your own property, but if you don't even offer a commission to Buyer's Brokers, those brokers will avoid you because there is nothing in it for them to endorse you to their buyers. You list your property cheap, and they're still going to take their buyers elsewhere. If your property is a good one, they'll bring their buyers all right - while working on their buyer's behalf to get them a better deal. It's like a war, except you don't even have a soldier on your side. You shouldn't expect any marketing or advertising at all with an open listing contract.
I have a special listing agreement contract. It's an open listing contract, but it has a hold-over clause. What is the holdover clause for? Well, the Seller's Broker's authority ends upon the expiry date of the contract, right? However, if a buyer who was introduced or shown to the property from any source whatsoever, through the marketing efforts of the broker during the listing period, subsequently effects a private sale with the Seller within the holdover period, then the Seller is liable for the total commission as stated on the contract. In other words, a holdover clause is a clause that protects the broker's interest even after the contract has expired, but only for a certain period of time, like a couple of months, depending on the agreement between the broker and the seller. It offers a small measure of protection, which is still better than the usual open listing. If you want it, I'll be happy to provide you a copy.
Of course, it still bears saying that you, as a seller or buyer or broker, should be careful of what you sign, especially where contracts are involved. If you think there's something amiss, consult a lawyer. There are lots of legal mumbo-jumbo that you shouldn't assume the meanings of .
Hope that helps ya!
Jon
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