The Indiana Association of Realtors has provided all Indiana real estate brokerages with an assortment of legal documents used in the transfer of property within our state. The forms are standard among all real estate brokerages. While some of the documents are lengthy, they have been written by experienced real estate attorneys to provide both you, the brokerage and the realtor protection and privilege as you begin the home selling process. Below I outline the Exclusive Right to Sell Listing Contract that I use with all of my home selling clients.
The preliminary section of the contract outlines the property address to be sold, by whom it will be sold, when it is to be sold, what terms of sale (financing) the property is eligible for, and what items will be excluded or included with the property. Listing contracts are usually six months in length.
In this article, the terms Realtor and Broker(age) are not interchangeable. Realtor refers to the real estate agent who is contracted by the Brokerage firm. In my case, I am the Realtor who is contracted by Century 21 Scheetz. This is an important designation as we talk about commission in Sections A & B. Click the About Me tab on my website where you can learn more about how Realtors are paid.
Sections A & B
Section A explains that this Listing Contract is exclusive and the Broker shall be paid whenever the property is transferred during the length of the contract, plus an amount of days following the termination of the contract and that is typically 90 days. You will also see the interest rate the Broker charges if the commission is paid after the closing date.
Section B identifies the commission rate the Brokerage will receive for its selling services. The minimum dollar amount identified is only applicable for houses selling at a price point under $42,000. Houses that are listed over $42,000 will qualify for the identified commission rate. Also outlined is the fee structure if the property leases or becomes a contract purchase.
The Metropolitan Indianapolis Board of Realtors (MIBOR) is a cooperating board of Brokers, which means that selling brokers agree to share their commission with a Broker who produces a buyer for your property. So whatever commission rate the seller and the Broker have agreed to (above) will be shared with the Broker who is serving the buyer of your property. The shared amount can vary and the terms are highlighted in Section B. Again the identified dollar amount is only valid for homes selling under $42,000.
Just to be clear, the commission amount in Section B, Item 1 is shared between two Brokerage firms. The commission amount for the cooperating Broker is not in addition to or on top of the commission amount in Section B, Item 1.
Sections C – G
Section C reiterates that the commission is a rate calculated from the purchase price of the property and that, if the contract goes to court, the losing party will pay a reasonable amount of the winning party’s legal fees.
Section D states that Century 21 Scheetz can accept earnest money and hold it in our escrow account and that money will go towards Broker’s commission that will be paid at closing.
Section E is a reminder to provide factual information about the house and it may be broadcast on the internet through our listing service in an effort to sell your house.
Section F is regarding the Seller’s Residential Real Estate Sales Disclosure form and advises the seller to complete the form with honesty and accuracy and it also indemnifies Century 21 Scheetz, me or any cooperating Brokerages or Realtors from loss or damages, arising from incorrect information on the Sales Disclosure.
Section G reminds the seller that the Brokerage and Realtor have no special training on environmental contaminants and that the seller should consult the appropriate experts when warranted.
Section H is all about Agency, which is the fiduciary or confidential and highly-trusted relationship between the seller and me. Once the relationship is established in writing or otherwise, by Indiana law, I owe you the duties of care, obedience, loyalty, disclosure, accounting and confidentiality regarding the sale of your property.
In some circumstances we may enter into a Limited Agency relationship, if I have a buying client who wants to purchase your house. Because I will be privy to confidential information for both you, the seller, and my buyer, and because I will benefit financially from both of you it is thought that I have ‘limited agency.’ Item 3 clearly outlines confidential information that I am forbidden to disclose to either party during a Limited Agency transaction.
Included in the Century 21 Scheetz office paperwork we will review Agency again.
Sections I & J
In Sections I & J, you will see information regarding seller authorization and cooperation in regards to marketing your house via the internet and showings. Without marketing your home, it’s kinda hard to sell it, wouldn’t you agree? This also the area where we can divulge your utility and HOA fees.
Item 10 allows me to let other buyers know when we have an offer, which is important when we have multiple showings and offers. Item 11 clarifies if you are providing a home warranty for the buyer.
Section J authorizes me to place a lockbox on your property so that buyers may have a chance to see your property with their Realtor. I utilize a secure showing service, so that we will have knowledge of every Realtor who enters your property. The service will contact you directly, allowing you to approve or deny the showings via text or email. If you are unavailable to respond to your showing request, you authorize me to approve them for you.
This section also reminds you to take precautions with your valuables during the showing period. While it is very uncommon for theft or damage to occur during a showing, every once in a great while the unthinkable happens and you agree to hold Century 21 Scheetz and myself harmless.
Sections K – N
Section K reviews the Fair Housing Act and the National Association of Realtor Code of Ethics.
Section L outlines additional provisions and I would be happy to review those with you individually.
Section M discusses wire fraud, which unfortunately, is prominent despite our modern technology. It a good rule of thumb to not transfer any money until you have personally verified the written instructions with the title company or me. Please do not wire any money with instructions that may have been emailed to you until you have a personal conversation with the person who emailed you the instructions. Sometimes the title company may ask you to log into a secure website to receive wiring instructions or they may just text them to you.
Section N reveals further conditions to the contract, specifically the mutual release fee.
Finally, on about line 248 of the five page contract we have the signature boxes to fully execute the Listing Contract. I know when we meet to list your house, it can feel overwhelming to quickly review the listing contract. Hopefully this article gives you more confidence that, when you work with me, you are working with a professional. You are entrusting me with the sale of your house and I don’t take that lightly. I pledge my loyalty to you and to maximize the sale of your house. Thank you for choosing McCoyMovesYou!
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