5.3 Listing and Buyer Agreements

The Listing Agreement

A listing agreement is the employment contract by which a property owner (the seller) hires a broker to market and sell real estate in exchange for compensation. It establishes the agency relationship, sets the listing price, defines the broker's authority and duties, and states the commission and term. Because a listing conveys authority to market an interest in real estate, it generally must be in writing, must have a definite expiration date, and may not contain an automatic-renewal clause in many states.

The listing belongs to the broker, not to the individual salesperson who took it; salespersons work under the broker's license. There are four classic listing types tested on the national portion of the exam:

The Four Listing Types in Depth

Exclusive right-to-sell is the most common and most protective for the broker. The seller agrees that the listing broker earns the commission regardless of who procures the buyer — even if the seller finds the buyer independently. The broker does not have to prove procuring cause to be paid.

Exclusive agency appoints a single broker, but the seller retains the right to sell the property themselves with no commission owed. If any agent — the listing broker or a cooperating broker — produces the buyer, the listing broker is paid; if the owner alone finds the buyer, no commission is due. This creates a built-in conflict because the seller competes with their own broker.

Open listing is a non-exclusive contract; the seller may give open listings to multiple brokers at once and may also sell the property personally. Only the broker who is the procuring cause of the sale earns a commission, and listing the property does not obligate the broker to spend any effort. Open listings are common in commercial and FSBO situations but rarely placed in the MLS.

Net Listings — A Hazard

In a net listing, the seller specifies a minimum net amount they must receive, and the broker keeps everything above that figure as commission. This invites a serious conflict of interest — the broker is tempted to overprice or conceal a high offer to enlarge their cut — so net listings are prohibited or strongly discouraged in many states, including Florida, where they are permitted only under narrow disclosure conditions and are generally avoided.

Buyer-Broker Agreements

A buyer-broker (buyer-agency) agreement is the mirror image of a listing: the buyer hires a broker to locate and negotiate the purchase of property and to represent the buyer's interests as a client owed full fiduciary duties. Like listings, buyer agreements can be exclusive (the buyer works with only that broker and owes compensation per the contract) or non-exclusive.

Following the National Association of REALTORS settlement effective August 2024, buyers in MLS-listed transactions must generally sign a written buyer-broker agreement specifying compensation before touring homes, and offers of buyer-broker compensation can no longer be advertised in the MLS. This made the written buyer agreement and clear fee disclosure central to modern practice.

A buyer agreement spells out the broker's compensation (which may be paid by the buyer, by the seller, or split), the geographic and price scope of the search, the agreement's term, and how the broker is paid if the buyer purchases a property the broker introduced.

Procuring Cause, Commission, Termination, and the MLS

Procuring cause is the broker whose continuous, uninterrupted efforts set in motion the chain of events that resulted in a ready, willing, and able buyer on terms the seller accepts. A broker earns the commission when they produce such a buyer; in an exclusive right-to-sell listing, the broker is owed the fee even at closing by another agent. Disputes between cooperating brokers over who earned the fee are resolved on procuring-cause principles, often through arbitration.

Termination of Agency

A listing or buyer agency may end by:

• Performance — the purpose is fulfilled (the property sells).
• Expiration — the stated term lapses.
• Mutual agreement — both parties cancel.
• Revocation or renunciation — either party ends it, though wrongful termination may create liability for damages.
• Operation of law — death or incapacity of either party, destruction of the property, or bankruptcy.

The Multiple Listing Service (MLS)

The Multiple Listing Service (MLS) is a cooperative, broker-to-broker database in which listing brokers share their exclusive listings so that cooperating brokers can find buyers, historically in exchange for a split of the commission. The MLS broadens a property's exposure, but membership and rules are private — the MLS itself is not a government body. Exclusive right-to-sell and exclusive agency listings are typically placed in the MLS; open and net listings usually are not.