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in this video we're going to discuss the listing contract there are two questions that i'm going to answer that you need to know for your real estate licensing exam number one is what is a listing contract or sometimes called a listing agreement listing contract and listing agreement can be used interchangeably and then we're going to talk about the five different types of listing contracts all right so let's first deal with what is a listing contract well the first thing to understand the listing contract defines the relationship and it defines the relationship between the seller and the broker or the real estate firm this is important because a listing contract is a basically an employment contract between the listing broker and the seller even though it appears that the contract is between the seller and the listing agent now the listing agent is signing on behalf of the listing broker and remember when a listing agent shows up at a seller's house and they sit down at the kitchen table it's the listing agent that signs the listing contract not the broker and the reason that happens is the relationship between the listing agent and the listing broker is what we call a general agency relationship therefore it allows the listing agent to actually speak on behalf of the listing broker and therefore the listing agent is allowed to sign on behalf of uh sign on the listing contract on behalf of the listing broker we're going to talk more about that in the agency video but i just wanted to to make sure that you understood that concept there the listing contract defines the relationship between the seller and the listing broker now the listing does some other very very important things that we have to know number two it establishes what the listing price is how much is this property up for sale number three it defines what the commission rate is going to be the commission rate that the seller is going to pay the real estate broker for services the other thing that it's going to do is define the the roles and responsibilities what we call r and r the roles and responsibilities of the real estate broker and all the agents that work under that listing broker now the listing contract also has a co has to have a couple of other things it must have a start date and an end date what we call an expiration date an expiration date you can't just put in for uh put on the listing contract this is for 30 days or 60 days you have to have actual dates this starts august 1st 2020 and it ends october 31st 2020 specific dates are required the next thing that it has to have is the signatures the signatures of all sellers all of them not just one out of two not a majority anyone that has a legal interest or legal ownership in that real estate or that piece of real property must sign the listing contract now if it's if the real property is owned by a corporation or an llc or one of those type of things then we're going to go to the operating agreement or the articles of incorporation to find out who has signature authority or can sign on behalf of the other principals within that organization it's very common in an llc which is a limited liability company it's very common where there might be five or six principles but only one of the principles has the signature authority now if there's nothing established in those articles of incorporations or the bylaws or the operating agreement depending on which state you're in then all of the principles for that for that entity must sign the listing contract and the last thing that it must have is the legal description now remember the legal description from a previous video is what i call the legal address the legal address where it's legally described or the location is legally described now listing contracts can have a bunch of other stuff and they do often like the postal address if it's not raw land it can have things like what type of personal property will and won't be included in the the sale or the transaction or what fixtures are going to be included or not included such as family heirlooms the chandelier those type of things but this is basically the minimum of what has to be in a listing contract for it to be legally binding and enforceable all right the next thing i want to talk about are the the types of listing contracts that you need to know for your real estate licensing exam and there are five of them that you need to know and i'm going to discuss the differences between all five of them now the first one is what we call an exclusive right to sell exclusive right to sell now under an exclusive right to sell listing contract remember it's a type of listing contract it simply means that the broker the listing broker has the exclusive right to represent the seller in the transaction therefore no matter who procures the buyer then the listing broker is going to get paid the agreed upon commission that was listed in the listing contract so even if the seller does their own open house and finds their own buyer then the the listing broker is still going to receive the commission the second type i want to talk about is what we call an exclusive agency agreement or exclusive agency contract exclusive agency contract looks a lot like the exclusive right to sell but there is one difference and that is the seller reserves the right to procure their own buyer all right so it's a partial exclusive right to sell so it so the seller is able to go out and try to find their own buyer if they find their own buyer then they don't pay a commission but if a buyer is procured by any other means then the broker is entitled to the agreed upon commission that was listed in that listing contract the third type i want to talk about is what's called an open listing an open listing an open listing simply means that the seller is allowed to go out and and sign a listing contract with as many different brokers as they want to and the broker that procures the buyer gets paid the commission so the seller could literally go out and hire five different real estate firms to represent them but whichever one actually brings the purchase contract of the buyer is the one that's going to end up getting paid should that purchase contract make it all the way to closing the other thing that an open listing does is it's partially an exclusive agency contract meaning that the the seller has the ability to try to find their own buyer and if they do procure their own buyer then they don't have to pay a commission it's a pretty rare type of listing contract but it is utilized mostly where i've seen it personally is mostly in the more rural areas the fourth type of contract i want to talk about is what we call a flat fee a flat fee listing over the years they've been becoming more and more popular and this is where the listing broker simply charges uh x amount of dollars to sell your property now it's a type of exclusive right to sell meaning the the listing broker is still going to get paid uh the agreed upon no matter where the buyer comes from but it's at a it's at a a flat rate so they may charge for example they may charge the seller a flat fee of five thousand dollars to transact the the real estate deal so it's one fee and that's all it is so no matter where that buyer comes from the listing broker is still going to get paid that five thousand dollar commission okay now the fifth and final type of listing i want to talk about it's what's called a net listing a net listing now keep in mind that a net listing is not legal in every state and in fact the last time i checked which would have been i think in 2017 so it's been a few years ago only like 17 out of the 50 states actually allowed net listings so your state may or may not allow them but you need to know them anyways for the real estate licensing exam all right so what is a net listing well the net listing basically says that the seller wants a net amount from the sale of their property and anything above and beyond that net amount is the commission for the real estate broker now these have to be predetermined at the time that the listing contract is signed so let me give you an example let's say that the seller the seller wants a net of two hundred thousand dollars when it's all said and done they want to check at closing for 200 000 and let's just say that the broker decides well this is unique and i want to make at least 10 percent off this deal so if the seller seller's going to get 200 000 then how much more is going to have to be charged to cover that 10 percent commission