Southern California Real Estate-Park Place GMAC Realty-Listing Contract

Contracts

A contract is an agreement, between two or more parties , to do (or not do) a certain thing which the court will enforce. It does not have to be a twenty-page legal document; it could a verbal promise or even a movie ticket. To be enforced by a court, an agreement must be made according to the rules of contract law. There are four essential elements for a valid contract: capacity to contract, mutual consent, consideration, and a lawful purpose. In addition, certain contracts (especially real estate contracts) must be in writing and signed to be enforceable.
1. Capacity to contract.
To be a valid contract, a person must be at least 18 years old, and must also be legally competent According to the Civil Code, a person who is "entirely without understanding" cannot make a contract
2. Consideration .
Even when all parties who have the capacity to contract freely consent to an agreement, it isn't a valid contract unless it is supported by consideration. Consideration is something of value exchanged by the parties to the contract. A contract can not be a one-way street: each party must give something to the other in order to get something from the other.
3. Mutual Consent.
For a contract to be a binding obligation, all the parties must consent to its terms. This mutual consent is sometimes referred to as a meeting of the minds. It is achieved through offer and acceptance.
4. Lawful Purpose.
The purpose of a contract must be lawful when the contract is made. If one person promises to pay another for committing an illegal act, their contract is void and cannot be enforced by a court.

Four Basic Types of Listing Contracts in California are:

1. Exclusive Right to Sell Listing;
2. Exclusive Agency Listing;
3. Open Listing;
4. Net Listing;

A listing contract is an employment contract that establishes an agency relationship between a broker and a property owner for the purpose of attempting to negotiate the sale or purchased or real property . The amount of commission to be received is a matter of agreement between principal and agent. This amount is not fixed by law. They are set by each Broker individually and may be negotiable between Seller and Broker. The main difference between the Exclusive Right to Sell Listing and the other listing contracts, is that the broker is entitled to receive a commission regardless of who sells the listing including the home owner.

Exclusive Right to Sell Listing;

The most widely used listing contract among brokers and entitles broker to receive a commission regardless of who sells the property, including the owner.

Exlusive Agency Listing;

An Exclusive Agency Listing is a contract containing the words 'exclusive agency.' The commission is payable to the broker named in the contract only if the broker or any other broker finds the buyer and effects the sale. However, if the seller sells the property himself, he does not have to pay a commission.

Open Listing;

An Open Listing is a written memorandum signed by the party to be charged which authorizes the broker to act as agent to the sale of certain described property. Open Listings are characterized by the following:
a Usually no termination date given;
b .Any number of agents may be hired;
c. Seller is not required to notify agent in event of sale;
d. Sale cancels all open listings;
e. Seller may sell himself without liability for commission;
f. Broker who is procuring cause is the one who earns the commission;

Net Listing;

In a Net Listing the compensation is not definitely determined, but a clause in the contract usually permits the agent to retain as compensation all the money received in excess of the selling price set by the seller. The agent is required by the Real Estate Law to reveal to both buyer and seller, in writing within one month of the closing of the transaction, the selling price involved. The law permits this information to be disclosed by the closing statement of the escrow holder and this is the usual practice.

Rember to obtain a copy of all documents you sign.
Note: A Lisiting Contract must be accompanied by an agency disclosure (Seller's Advisory) form at the time of signing the listing contract.

Sample Residential Listing Contract or Agreement