A listing agreement is the contract a home seller signs with their real estate agent. It authorizes the agent to legally represent the home sale and details the services they will provide, their commission rate, and more.
Before you sign a listing agreement, make sure that the agent is the right fit and you're getting the best value. Contracts are usually 3–6 months long, and canceling early may come with penalties.
If you're looking for a listing agent, consider using a free service like Clever Real Estate. Clever matches you with top local agents who have been vetted for performance and client satisfaction. These agents charge a low 1.5% listing fee while still providing full service, which means you can find the right realtor and save thousands.
What is a listing agreement?
A listing agreement is the contract a home seller signs with their real estate agent. It’s a legally binding document that guides the process of listing, marketing, and ultimately closing a real estate transaction.
A listing agreement authorizes your agent to legally represent you in the sale of your home, allowing them to market your home on a multiple listing service (MLS), install a lockbox, and show your home to prospective buyers.
It also specifies important details, including:
- A general list of services you’ll receive
- The commission rate and payment structure
- How long the agreement will last
Listing agreements vary by type and location, but all share the same goal: providing a legal foundation that aligns the seller’s and listing agent’s expectations and responsibilities.
Do you have to sign a listing agreement?
If you’re a seller who wants to work with a listing agent, then yes — you’ll have to sign a listing agreement.
However, a listing agreement is not necessarily required to sell a home. You can opt to sell your home without an agent, commonly known as listing for sale by owner (FSBO).
Buyers don’t sign listing agreements. As the name suggests, listing agreements exclusively concern those listing a property for sale. Instead, buyers sign a buyer agency agreement.
When do you sign a listing agreement?
You’ll sign a listing agreement as soon as you choose a realtor to sell your home.
Without a signed listing agreement in place, your agent isn’t legally entitled to represent you in your sale. In other words, they can’t do anything until that contract is signed.
Because listing agreements are legally binding, you should only sign if you’re 100% confident you’ve found a great agent.
Before signing a listing agreement, we recommend interviewing at least 2–3 real estate agents to weigh your options. This will give you the chance to ask questions and get a feel for which potential agent is the best fit for your situation, goals, and preferences.
While you’re in the process of choosing, be clear with each agent you speak with that you’re not planning to commit to anything on the spot. Setting this expectation can help you avoid situations where you might feel pressured to sign a contract without adequate time to comb through the fine print.
What to know before signing a listing agreement
A listing agreement is a legally binding document, so it’s crucial to read and understand it before you sign.
A typical listing agreement stipulates the key terms that will guide the sale of your home. This includes:
- The services the agent will provide — like an MLS listing, professional photography, and showings
- The commission rate and structure
- How long the contract will last — typically 3–6 months, or sometimes up to 12 months
- Required disclosures about material defects, such as lead paint
- Guidelines for terminating the listing agreement
- Other state and federally mandated legal requirements, such as anti-discrimination regulations
You can ask your agent to explain anything that seems unclear. If something in a contract seems problematic, seek legal advice from a real estate attorney or simply find another agent.
🚩 Possible red flags
Most listing agreements are standard and predictable, but you should still be on the lookout.
Examples of red flags include:
- A pushy agent. Avoid an agent who attempts to pressure you into anything. You should never feel rushed into signing a listing agreement before you’re ready.
- Unusually high commission. Average commission rates vary by location, but one that’s significantly over the national average of 2.82% could be cause for concern.
- A leisurely timeline. Anything longer than 12 months is a definite red flag. If you’re looking for a shorter time commitment, interview agents until you find one who’s on the same page.
Can you negotiate a listing agreement?
Technically, everything in real estate is negotiable, but that doesn’t mean your agent will agree to your proposed terms.
Agents typically use standard, boilerplate contracts provided by their local associations. These contracts are heavily vetted by real estate attorneys to help both parties avoid legal complications.
Though the bulk of the contract will stay the same, there are opportunities to negotiate key details such as the listing price, listing term, and commission rate.
Boilerplate listing agreements also generally include a section where agents can write in any special considerations. For example, they may agree to special terms if you have a buyer picked out, since they won’t have to invest time and effort into marketing.
Types of listing agreements
Most sellers sign exclusive right to sell listing agreements
An exclusive right to sell agreement means you work with one agent and owe their fee, no matter who finds the buyer.
Agents strongly prefer this structure because they cover upfront marketing costs and invest significant time before getting paid. For sellers, it offers dedicated representation and avoids the confusion and disputes common with other listing types.
Exclusive agency listing agreements are rare
Exclusive agency agreements let you work with one agent while retaining the right to sell the home yourself. You only pay commission if the agent brings the buyer.
This setup is uncommon because it can create uncertainty around compensation and disputes over who actually procured the buyer. Also, an agent may be less motivated to market your home because they might not be paid for their efforts.
Open listing agreements can be useful for FSBO sellers
Open listing agreements allow FSBO sellers to work with multiple agents non-exclusively.
The agents market the home, and the seller handles the rest of the work, such as pricing, negotiations, and paperwork. Sellers pay commission only to the agent who brings a buyer.
What is a net listing?
In a net listing agreement, the seller agrees to pay their listing agent any profit that exceeds the agreed-upon listing price.
For example, let’s say you list your house at $500,000 and sell it for $575,000. Your agent’s commission would be $75,000 — the "net" difference between the listing and selling prices.
Net listings are illegal in many states and prohibited by the National Association of Realtors due to the conflicts they create. A home could sell far above the listing price, leaving the seller feeling misled — or sell at or below the listing price, forcing the agent to absorb the loss.
Terminating a listing agreement
Your listing agreement spells out how cancellation works. It’s important to cancel your real estate contract properly. Without a formal release, you could still owe commission, even if you relist with another agent.
Problems like poor communication, weak marketing, or unethical behavior can justify ending the relationship. In other cases, events like a divorce, job loss, or family emergency may make selling no longer feasible.
If your agent is meeting their contractual obligations and no material issue exists, terminating will be much harder. Backing out also becomes more complicated if your home is already under contract. In that case, canceling incorrectly can expose you to legal action from both the buyer and your agent.
Here are the proper steps to take to cancel:
- Review your contract. You’re legally bound by its terms, and most agreements outline a formal cancellation process. Some may include mediation requirements or early termination fees.
- Talk to your agent. Many agents are willing to release unhappy clients or offer a switch to another agent within their brokerage to resolve the issue without breaching the contract.
- Get a written release. If you can’t resolve the dispute, request a written termination citing specific failures to meet the agreement. Without written confirmation, your agent may still be entitled to their commission — even if you hire someone else.
Your next step: Find the right agent
For most sellers, signing a listing agreement with a qualified agent is the safest way to sell a home efficiently and for top dollar. A good listing agent handles pricing strategy, marketing, negotiations, and contract details — and helps you avoid costly mistakes that can delay or derail a sale.
The key is choosing an agent you trust. Look for someone with a strong track record in your area, clear communication, and a willingness to explain their strategy before asking you to sign anything. Interviewing multiple agents and comparing their experience, recent sales, and marketing plans can help you feel confident before committing to a listing agreement.
If you want a low-pressure way to find a trustworthy agent, Clever Real Estate can help.
Clever matches you with top-performing local realtors from major brokerages, all vetted for experience, sales history, and customer satisfaction. You can compare agents, ask questions, and decide who’s right for you — with no obligation to sign and no upfront cost. If you do sign with an agent, you'll get full service for a low 1.5% commission rate.
- Answer 5 simple questions about your sale
- Get matched with 2–3 top local agents in minutes
- Compare options, choose the best fit, save up to 50% on fees
