Alabama Real Estate: Listing Agreements Violations & Disciplinary Actions

Instructor: Tara Schofield

Tara has a PhD in Marketing & Management

Get ready to fill out the listing agreement and start the sales process for real estate. Learn what to avoid when completing a listing agreement to ensure you do not violate rules or regulations.

What is a Listing Agreement?

You are a real estate agent in Alabama. You just got a call from a potential client this morning, Rhonda, that's looking for an agent to sell her home. She has a 3-bedroom house that's in a prime location. This is an exciting list and you think you can sell the house quickly if you can get a signed listing agreement.

A listing agreement is the contract between a seller and agent that outlines the basic information defining the terms of the home sale. The listing agreement includes the date the contract expires, the asking price of the property, commission percentage, and any conditions that may affect commission payments.

The listing agreement may also include the type of relationship the agent has to the seller,identifying what each party is responsible for in the course of the listing and sale.

Once the information is completed, the sellers and the agent must sign the agreement. This ensures all parties have a chance to review the contract and make sure everything is correct. You must provide a copy of the listing agreement to your client.

Listing Agreement Violations

One of the most significant violations in listing agreements is neglecting to state an expiration date. When you work with Rhonda, you discuss plans for selling her home. She wants a quick sale and wants the listing agreement to expire in 30 days. You explain that it may take a little while to find a buyer and the sale may take 30 days or longer to close.

You ask Rhonda for a six-month listing agreement and she agrees. At that point, if the home isn't closed, you will not be representing Rhonda any longer. However, there is one common situation that allows you to be paid commission even if the listing agreement has expired.

Many listing agreement terms include protection for you in the event that a party you previously showed the house to decides to purchase the property after the listing expires. For instance, say you show the home to Max and Patty who make an offer on a different home. Unfortunately, they were unable to close on that home and are back in the market.

After your listing for Rhonda expires, they decide to purchase Rhonda's home after all. If Max and Patty were exceptions, you can still earn your commission if the listing agreement protects you in the event that a party you showed the home to decides to purchase at a future date.

Another violation happens when a listing agent creates their own agreement or drastically changes the state-approved listing agreement template. The template allows information pertinent to the property to be added, such as the address, seller, agent, terms, etc. to be entered in blank spaces on the form. However, the agent is not allowed to make substantial changes or additions to the standardized form without the form being created by an attorney.

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