What are the four types of listing contracts?

When you list your business for sale with a Broker, different options are available under the four types of listing agreements.



An open listing is almost like a "for sale by owner" listing. A business owner seller offers pay a sales commission, to one or more real estate agents, to the first one who brings an acceptable purchase agreement. However, no commission is owed if the seller finds a buyer on his own, without any agent's help. The open listing creates competition between the seller and agent(s) to find an willing buyer. Most agents won't take this type of listing because the seller can either sell the home alone or withdraw the listing without notice. Few agents will spend their time or money working on an open listing, except when the business is very unique or if the the inventory of business for sale is very low.



An exclusive agency listing contracts one agent to sell the business. If that agent, or any other licensed cooperating agent finds an acceptable buyer, the seller must pay a sales commission. Again, as with a open listing, no sales commission is owed if the home seller finds a buyer on his own. Due to the lack of control over the outcome, most real estate agents are reluctant to work on an exclusive agency listing.



Probably 99 percent of business listings are this type, where the listing agent has 100 percent control of the transaction. Whether the seller, the listing agent or a cooperating selling agent finds an acceptable buyer, the listing agent will earn the sales commission. If another cooperating agent is involved, the commission is typically split between the agents. In most markets, a 90 or 120-day exclusive right to sell gives the experienced agent time to effectively market the business. If the listing expires and the agent is doing a poor job, the seller isn't stuck with a bad agent. However, if the agent is doing a good job when the listing expires, the listing can be renewed. An alternative is a 180-day listing with an unconditional cancelation clause after 90 or 120 days.



The net listing can be a dangerous and is illegal in some states. Under this agreement, the seller tells their agent the net price they want for their business. The listing agent can then add the desired commission onto this net price when presenting it to buyers. If the agent obtains a purchase offer far above the seller's net listing price, the seller may feel cheated and accuse the listing agent of not disclosing the businesses's true market value. Or, if the agent receives a low purchase offer close to the net price, yielding the listing agent little or no commission, the agent might be tempted to not present the offer to the seller. A better alternative to a net listing is an exclusive right to sell with a listing price at the amount the seller wants to net, plus the listing agent's sales commission.