What is a listing agreement?

A listing agreement is fundamentally a contract between a seller and a real estate broker, in which the seller authorizes the broker to market and sell their property. This agreement establishes the terms of the relationship, including the nature of the broker's authority, the duration of the agreement, and often the commission structure upon the sale of the property.

This contract is crucial as it protects the rights of both the seller and the broker by clearly defining expectations and responsibilities. It usually outlines how the property will be marketed and what efforts the broker will undertake to secure a buyer. The broker, in turn, gains the right to earn a commission if the property is sold as a result of their efforts. Understanding the listing agreement is essential for anyone involved in real estate transactions, as it lays the groundwork for a collaborative relationship between the seller and the broker.

In contrast, options regarding a buyer's financial obligations or proposals to buy a property focus on different aspects of real estate transactions. Additionally, a government form for property transactions does not adequately describe a listing agreement, as it does not involve the specific relationship defined between a seller and a broker.