Red Flags to Watch for in Your Listing Agreement
Before you sign anything, look closely for these phrases or sections in your listing agreement. They might seem standard, but they can quietly cost you a lot of money:
“Broker retains full commission if buyer is unrepresented”
“Broker may act as dual agent or transaction broker”
“Commission not subject to renegotiation”
"Compensation to buyer's broker"
"Compensation for unrepresented buyer"
If you see anything like this, ask questions and get clarification in writing. Don’t let vague language work against you. Every state's contract is different, and the language used can be intentionally confusing, so ask your agent exactly which section covers buyer broker compensation and what happens if the buyer is unrepresented. Get clear answers, don’t rely on assumptions.
For example, in the standard Florida listing agreement most agents use, you would need to look at both the "Compensation" and "Compensation to Buyers Brokers" sections. In the Texas listing agreement, look for the section titled "Broker's Fee (without compensation for other broker)." And in the Northern Virginia contract, the section you want to pay attention to is currently called "Additional Listing Broker Compensation for Unrepresented Buyer."
Myth-Busting: Your Agent Doesn’t Have to Represent Both Sides
There's a common misconception that a buyer has to have an agent in order to buy a home. That's just not true. Some sellers also believe that if the buyer is unrepresented, their agent should or has to automatically step in to work with both sides.
MYTH: If a buyer doesn’t have an agent, they have to find one or your listing agent has to step in and represent them.
FACT: You’re never required to let your listing agent represent the buyer as well. In fact, doing so can create serious conflicts of interest. Your agent’s job is to protect your interests, and that becomes nearly impossible when they’re trying to please both parties.
When sellers have a better understanding about what is and isn't allowed or required, they can be better prepared to advocate for themselves and make decisions that are best for them.
Commission Questions to Ask Before You Sign A Listing Agreement
Before you commit to an agent or a contract, arm yourself with the right questions. Make sure you get clear answers and you feel good about how your agent handled responding to them. If something seems off, you can always interview another agent. Here are some things to check on:
What happens to the commission if the buyer doesn’t have an agent?
Will you ever act as a dual agent or transaction broker?
Can we write in a clause that protects me from paying more than necessary?
Are you willing to consult me before making any commission-related decisions?
Armed with these questions, you can have a transparent conversation with your agent to make sure you understand whether your best interests are being taken into account.
What To Confirm in Your Listing Agreement
When you’re reviewing your listing agreement, make sure you retain the right to negotiate if the buyer doesn’t have an agent. Don’t agree to automatically give your listing agent the full commission. You can:
Specify that the total commission will be reduced in unrepresented scenarios
Require your agent to consult you before making commission decisions
Clearly prohibit them from acting as a dual agent or transaction broker
Whatever you choose to do, make sure it's reflected both in the selections you check within the contract and the additional terms section, if there is one. That way you and your agent are clear about your preferences. This is your house, your money, and your deal. Your agent should work for you, not for themselves.
