When you agree a listing price this becomes the key point of the listing agreement.

The listing agreement is a legal document that is in effect a contract of employment. You employ me to market your home and to attempt to achieve a sale on your behalf.

Because this is a legally binding document on both sides, it is important that you understand what the listing agreement commits each of us to before you sign it.

You can take a look at a typical blank listing agreement here.

These notes cover only some areas of the listing agreement, and it is not implied that other areas are less important, so please be sure you understand every section. Once you have signed the agreement it becomes a legally binding document, and you will not be able to claim that you did not understand its implications at a later time.

When the agreement is prepared to your satisfaction, each owner of the property should do the following:

• initial and date at the bottom of pages 1 and 2
• sign and date the transaction broker notice at the top of page 3
• initial the arbitration clause in section 10
• sign, date and complete the seller information section at the end of the document

Then return the agreement to me, after which I will sign it and return a copy to you for your records.

Main Clauses

Authority to Sell Property. When the listing agreement has been signed both parties it takes effect from the start date, and terminates (in the absence of a sale) on the termination date. I set my listing agreements to run for a period of three months. If the property fails to sell within three months the seller and broker may agree to an extension to continue the listing agreement for a further period, either on the same or on new terms.

Price and Terms. The price entered is the 'listing price', also called the 'asking price' on which a potential buyer is invited to base his offer. Buyers may offer more or less than the listing price, but you are not required to accept any offer of less than the listing price unless you wish to.

All financing terms are usually left as options for the buyer, other than seller financing or assumption of the existing mortgage, neither of which is usually offered in the case of a rental home. It is not usual for the seller to offer to pay any mortgage discount or closing costs for the buyer.

Broker Obligations. You are agreeing to allow me to advertise the property for sale as appropriate, and in particular to put it into the Multiple Listing System (MLS) to make it accessible to other realtors who may bring buyers to us.

You are also agreeing to the use of a lockbox to facilitate showing the property to potential buyers, with any security risk that this may entail.

Seller Obligations. You are agreeing to disclose all material facts that you are aware of that may affect the value of the property that may not be visible to buyer, both at the time of listing and subsequently.

Compensation. You are agreeing to pay me the specified amount (usually a percentage of the contract price) in return for introducing a buyer who is willing and able to purchase according to the terms set out in the listing agreement. Should you subsequently choose not to close on a fully executed (signed) contract, then you may still be liable to pay the broker's compensation.

Cooperation with Other Brokers. You are agreeing that I am entitled to share the compensation that is set out in the agreement with another broker, who may be acting on behalf of the buyer.

Dispute Resolution. You are agreeing that any dispute between yourself and me that is not settled by mediation will be settled by neutral binding arbitration rather than by recourse to litigation.