At the time an Arizona homeowner lists their home for sale with a Realtor®, an Exclusive Right to Sell Listing Contract is completed and signed. In addition to the many topics that are included in the boilerplate language and should be reviewed during the listing appointment, there are 3 major items that need to be determined: 1) the start and end dates of the listing agreement (the listing period); 2) the list price; and 3) the compensation to be paid to the Broker.
The listing period and list price will be determined by the Seller. Many factors, including market conditions, interest rates and market comparables enter into the equation in setting the price for your home, and your agent will give you his or her recommendations based on their experience in the current market.
In terms of compensation paid to the Broker, the listing agreement states that if a Broker brings a ready, willing and able purchaser to the Seller within the terms of the listing agreement, the Seller shall compensate the Broker. A common question that Sellers ask is: “how is the compensation determined”?
Commissions are typically based on a percentage of the sales price. The commission is paid to the listing Broker, and The Exclusive Right to Sell listing contract will identify the amount of the total commission, and as well as how much of the total commission the listing Broker will be paying to the Buyer’s Broker.
It is important to understand that there is no standard or set commission in the real estate industry as this would be price fixing, a violation of the Sherman Anti-Trust Act. Clearly outlined in the section directly above where the Seller signs the listing agreement, each brokerage is responsible for negotiating with the Seller its own fees and commission requirements without input from other brokers, MLS boards or other professional organizations.
Only a signed commission agreement is enforceable under the Statute of Frauds and it is strictly enforced by the Arizona Courts. Interestingly, the law on this topic has been the same since 1913 and was designed to protect owners of real estate against unfounded claims of brokers.
It is in the best interest of the Seller to read the entire Exclusive Right to Sell Listing Contract and ask questions before signing.
As Scottsdale real estate specialists, The Matheson Team‘s goal is to educate and fully inform our clients in all steps of the real estate process. Contact us if we can help you sell or buy a home in the Scottsdale area.
Realtor | Founder
The Matheson Team – RE/MAX Fine Properties
21000 N. Pima Rd., #100, Scottsdale, AZ 85255
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