When you’re ready to sell your property, one of the first big decisions is choosing a Realtor® to guide you through the process. Every broker brings something a little different to the table - experience, marketing strategies, and specialty market expertise - so it’s helpful to understand the general structure of how a listing agreement works before moving forward.
Selecting a Realtor®
Sellers often find a Realtor® through an online search, a personal referral, or another trusted source. There’s no “right” way to choose, but it helps to consider things like experience, market knowledge, compensation, marketing plans, and the resources the brokerage has to offer. If you don’t already have a trusted broker, we recommend interviewing a few. This is an important relationship where trust and communication are critical, and you want to feel comfortable asking questions. Once you’ve chosen who you’d like to work with, your working relationship is formalized by signing an Exclusive Right-to-Sell Listing Contract.
What is an Exclusive Right-to-Sell Listing Contract?
Often referred to as a listing agreement, this contract outlines the relationship between the seller and broker. Whether selling or leasing a property, it gives the Realtor® the formal authority to market the property on your behalf. Important details include the listing period, type of brokerage relationship, compensation, multiple listing service (MLS) entry and marketing, pricing, and what’s included or excluded from the sale.
Listing Period
The listing period defines how long the agreement with your broker will last - typically this is written for six months or a year. If the property hasn’t sold by the end of the listing period, the contract can either expire or be extended. There is a section in the listing agreement that addresses the “holdover period” - this is a set number of days after the contract ends during which the broker may still be entitled to compensation if the property sells to a buyer who showed interest during the listing period. To enforce this provision, the broker must submit the names to the seller in writing.
Brokerage Relationship
The agreement also clarifies the type of working relationship you’ll have with your Realtor® . In most cases, the Realtor® represents either the buyer or the seller as an agent. In some cases, they may act as a transaction broker, assisting both parties in the transaction without being able to advocate for one or the other. A seller's agent can change into a transaction broker over the course of the listing contract if both parties agree and the contract is amended. We strongly recommend talking with your broker before you are in that position so you fully understand the implications and feel comfortable moving forward.
No matter the relationship, brokers are required to follow a set of “Uniform Duties” such as exercising reasonable skill and care, presenting all offers to the seller, keeping you informed throughout the process, and maintaining confidentiality.
Sale Compensation
The compensation is what the seller pays for the broker’s service. This amount is negotiable and typically written as a percentage of the sale price for a flat fee. This section also includes a section for the buyer’s agent compensation. While not required, offering this can significantly benefit the seller by encouraging more showings and supporting buyers who may not have the means to pay their agent directly, particularly first-time homebuyers. Ultimately, this makes your property more accessible and competitive in the market.
MLS & Marketing
Allowing the listing broker to enter your property into the multiple listing service (MLS) gives it broad exposure to all other brokers in the area, increasing the chances of getting it in front of qualified buyers. It also contributes to valuable market data that helps brokers track trends and provide accurate pricing strategies. As members of the Durango Area Association of Realtors® (DAAR), we use the Colorado Real Estate Network for our multiple listing service.
The MLS automatically syndicates to hundreds of online resources including popular sites like Zillow, Realtor.com, and brokerage websites, which expands your reach to an even larger audience. We monitor these sites regularly to ensure that all information is up-to-date and accurate. A seller can opt out of online syndication if they prefer to keep the listing private.
In addition to the MLS, the listing agreement may include a range of additional marketing tools designed to help your property stand out. These can include professional photography, 3D walk-through tours, social media promotion, broker open houses, targeted advertising, and more - tailored to highlight your property’s best features and reach the right buyers.
The Durango Team at The Wells Group is committed to providing broad, effective marketing for every listing. Our goal is to give your property the maximum visibility and the best chance to sell.
Price and Terms
Your Realtor® will prepare a Comparative Market Analysis (CMA) to guide you in deciding on a competitive listing price based on your goals and timing. If needed, the price can be adjusted through an amendment during the listing period. Final pricing is, of course, subject to negotiation with a buyer once an offer is made. The listing agreement can also note financing terms the seller won’t accept, such as FHA or VA loans. This is not common, most sellers want to consider all offers, but it is an option if there’s a reason to rule out certain types of financing from the start.
Earnest money is a good faith deposit from the buyer, typically a flat amount based on the price range of the property, and shows serious intent to follow through with the purchase. It gives the seller some financial protection if the buyer defaults, and in some cases, can help offset costs the seller may have already incurred, such as moving expenses, hotels, etc. The requested amount is memorialized in the listing agreement, however it is a point of negotiation when a buyer submits an offer.
Inclusions and Exclusions
This section of the agreement defines what items will be included in the sale, and what won’t. Standard home systems like heating, plumbing, electrical, sprinkler systems, etc. as well as items specially fit for the home (awnings, window screens, heating stoves, keys, etc.) are typically included unless otherwise noted. Additional inclusions are also noted in the listing agreement and may include items such as solar panels, security systems, and satellite systems - it’s important to differentiate whether these items are leased or owned. In some cases, a home may be sold fully furnished or include other items that add value to the property, like sound systems, hot tubs, and kitchen items. If certain items are excluded, it is important to be specific. For example: “All furniture included, except the primary bedroom mattress and wall decor”.
If there are a lot of inclusions, or the inclusion is a big ticket item like a snow blower or tractor, buyers and sellers can create a separate personal property agreement. This is especially helpful for loan-related reasons, since lenders typically don’t finance non-real estate items.
By signing a listing agreement, the seller enters into an exclusive working relationship with their chosen Realtor®. During the contract period, other Realtors® are not allowed to solicit the listing. If things aren’t working out between the seller and broker, open communication is key. A listing agreement can be terminated if necessary. Also, keep in mind that everyone listed on the property deed, or named in the trust that owns the property, must sign the agreement for the listing to move forward.
Listing agreements cover a lot of ground, and while this overview highlights the key points, there’s much more that can come into play depending on your property and goals. If you’re thinking about selling your property, working with a knowledgeable broker will make the process clearer, smoother, and far less stressful! For more information about listing property in Durango and Southwest Colorado, please contact Max Hutcheson and Deven Meininger - we’d love to help!
View a sample listing agreement here.
