3.3 Listing Agreements
Key Takeaways
- Exclusive right to sell pays the listing broker no matter who procures the buyer — even the owner.
- Exclusive agency lets the owner sell directly without owing commission, but any broker sale pays the listing broker.
- Open (non-exclusive) listings pay only the broker who is the procuring cause of the sale.
- Net listings are ILLEGAL in New York because they create a conflict of interest and invite fraud.
- New York's agency disclosure form must be presented at first substantive contact, and the new statewide buyer-agency agreement requirement took effect in 2024.
The Three Legal Listing Types
A listing agreement is the employment contract between a seller and a broker. New York recognizes three lawful forms, distinguished by who gets paid when.
Exclusive Right to Sell
The most protective arrangement for the broker.
| Who sells the property | Does the listing broker get paid? |
|---|---|
| Listing broker | YES |
| A cooperating broker | YES (listing broker is paid; splits with co-op) |
| The owner directly | YES — owner still owes the commission |
This is the standard form used for Multiple Listing Service (MLS) listings.
Exclusive Agency
The broker is the only broker, but the owner reserves the right to sell solo.
| Who sells | Listing broker paid? |
|---|---|
| Listing broker | YES |
| Any broker | YES (paid to listing broker) |
| Owner alone | NO commission owed |
Open Listing (Non-Exclusive)
| Feature | Detail |
|---|---|
| Number of brokers | Many; seller can list with several |
| Who is paid | Only the broker who is the procuring cause |
| Owner sells alone | No commission |
| Broker protection | Lowest |
Procuring Cause
Procuring cause is the agent whose efforts set in motion an unbroken chain of events leading to the sale. It decides who is paid under open listings and resolves disputes between cooperating brokers — a heavily tested concept.
Scenario: An open listing. Broker A shows the home; weeks later Broker B writes the accepted offer with the same buyer after A had stopped communicating. The commission turns on whose efforts were the uninterrupted, producing cause of the sale.
Net Listings — ILLEGAL in New York
A net listing lets the broker keep everything above a price the seller 'nets.' New York prohibits them.
| What it is | Why it is banned |
|---|---|
| 'Get me $300,000 net; keep the rest' | Broker is tempted to underprice to sell fast, or hide a higher offer |
| No stated commission | No transparency; breaches the fiduciary duty of loyalty |
Trap: A net listing is illegal even with the seller's written consent — written agreement does not cure the conflict.
Required Elements (Statute of Frauds)
To be enforceable, a New York listing must be in writing and contain:
| Element | Purpose |
|---|---|
| Written and signed | Statute of Frauds for agency employment |
| Parties identified | Seller and broker |
| Property description | What is being sold |
| Price | Asking price |
| Commission | Stated rate or fee (commissions are negotiable) |
| Definite expiration date | New York prohibits automatic renewal of broker-listing agreements |
| Fair-housing notice | Anti-discrimination language |
Trap: New York bars an automatic-renewal clause in a residential listing; a definite end date is mandatory. A 'self-renewing until canceled' listing is a wrong answer.
Protection (Extender / Safety) Clause
| Feature | Detail |
|---|---|
| Time window | Typically 30-180 days after expiration |
| Who is protected | Buyers the broker introduced during the listing |
| Effect | Commission earned if a protected buyer purchases after expiration |
| Requirement | Broker usually must deliver a written list of protected buyers |
New York Agency Disclosure & 2024 Buyer-Agency Rule
New York requires the agency disclosure form to be presented at the first substantive contact with a consumer, identifying the agent as a seller's agent, buyer's agent, dual agent, or broker's agent. Following the 2024 NAR settlement and New York rules, licensees working with buyers must now use a written buyer-agency agreement before showing property — a frequent new exam topic.
| Disclosure | Trigger |
|---|---|
| Agency disclosure form | First substantive contact |
| Written buyer-agency agreement | Before/at the start of representing a buyer (2024 requirement) |
| Commission negotiability notice | Reinforces that all commissions are negotiable |
Commission Is Always Negotiable
There is no standard or legally fixed commission rate in New York. Residential commissions commonly run 4-6% but are fully negotiable; agreeing with competitors to fix rates is illegal price-fixing under antitrust law.
| Commission form | Note |
|---|---|
| Percentage of price | Most common; negotiable |
| Flat fee | Permitted |
| Tiered / bonus | Permitted if disclosed |
How a Broker Earns the Commission
Under an exclusive right to sell, the broker generally earns the fee by producing a buyer who is ready, willing, and able to purchase on the seller's terms — even if the seller then backs out. This 'ready, willing, and able' standard is heavily tested.
Scenario: A broker brings a fully qualified, pre-approved buyer who signs at the full asking price. The seller changes her mind and refuses to sell. Under an exclusive-right listing, the broker has still earned the commission because the broker performed.
Termination of a Listing
A listing can end several ways, and the candidate should recognize each:
| How it ends | Explanation |
|---|---|
| Expiration | The definite end date passes (NY requires one) |
| Performance | The property sells and closes |
| Mutual agreement | Both parties cancel |
| Revocation/renunciation | Either party ends it (may create liability for damages) |
| Death/incapacity | Of either principal terminates the personal-service agency |
Trap: Because a listing is a personal-service agency, it terminates on the death or incapacity of the principal — it does not automatically pass to the estate. Combine that with the no-automatic-renewal rule and the required agency disclosures, and you have the full listing-agreement picture the exam expects.
Under an exclusive right to sell listing, the owner personally finds a buyer with no help from the broker. Who earns the commission?
A seller tells a broker, 'Get me $300,000 net and keep anything above it.' How is this treated in New York?
Which provision is REQUIRED in a New York residential listing agreement?