InfoBase – Chapter 23

Real Estate Commission

InfoBase - Chapter 23

Chapter 23

Concepts and Issues in Listing Agreements (Brokerage Engagement)


A listing agreement is a contract of employment between a broker and the owner of real property who wants to sell or lease the property.  Commission agreement, brokerage agreement, or a brokerage engagement are other names for employment agreements between brokers and owners, or between brokers and buyers or tenants when a broker represents a buyer or a tenant in a real estate transaction.

Listing agreements include information such as list price or rental rate, a legal description of the property, items of personal property (personalty) to be conveyed along with the real property, and the amount of commission due to the broker for the sale or lease. A listing agreement establishes the agent‑principal relationship between the broker and the owner of property.  The most common types of listing agreements are open listings and exclusive listings (including exclusive agency listings and exclusive right to sell listings).  Some states also allow for “net listings,” but Georgia is not one of them.


An open listing agreement is a contract in which the owner of property can retain one or more brokers and in which the owner retains the right to sell or rent the property without having to pay a commission to the broker(s).  In an open listing, the only broker to receive a commission, if any, is the broker who obtains a ready, willing, and able buyer on terms agreeable to the seller.  In Georgia, open listing agreements, like all brokerage engagements, must be in writing.  Furthermore, a broker cannot place a sign on the property offered for sale or rent unless the owner has given written permission.


In an exclusive listing agreement, an owner contracts with one broker to give that broker the exclusive right to sell or lease a property.  Brokers must honor the exclusive listing rights of other brokers.  A broker cannot enter into a listing agreement with an owner if the broker thinks that another broker already has exclusive listing rights.  However, the broker may enter into a listing agreement with the owner when the existing listing agreement with the other broker expires.  In Georgia, exclusive listings not only must be in writing, but unlike an open listing, must include a specific termination date.  The licensee must give a copy to all parties signing the agreement.

Two types of exclusive listing agreements exist. One allows the seller to sell the property independent of the broker without being obligated to pay a commission; the other does not.

(a) THE EXCLUSIVE AGENCY LISTING AGREEMENT – Exclusive agency listing agreements allow the owner to sell or lease the property with no obligation to pay the broker a commission.  However, if another licensee finds a ready, able, and willing buyer, and the owner does sell the property to that buyer, the listing broker receives the commission.
(b) THE EXCLUSIVE RIGHT TO SELL LISTING AGREEMENT – Exclusive right to sell listing agreements appoint a broker as exclusive agent and agree to pay the broker a commission no matter who actually finds a buyer or lessee.  Even if the owner finds a buyer without the assistance of the broker, the owner must pay the commission to the broker.   This type of listing is the one most commonly offered by brokers.


A net listing agreement is a contract in which the owner of property sets a specific dollar amount for which he or she will sell or rent the property.  Any dollar amount over the seller’s stated figure is the commission to the broker.  Net listing agreements are illegal in Georgia because of the potential conflicts they can create between the interests of the principal and the broker’s self-interest.


A multiple listing service (MLS) may allow the use of open, exclusive agency, and exclusive right to sell listing agreements.  However, in Georgia, the most common listing agreement is the exclusive right to sell arrangement.

The MLS is a cooperative agreement among brokers in a particular area in which the member brokers may sell property for which other member brokers have listings.  To participate as a member of a multiple listing service, a broker contributes money (either a percentage of each sale or a fixed dollar amount) to the listing service.  Most often, multiple listing services require broker-members to provide information on all property listings held by the participating brokers.  Most brokers prefer to participate in multiple listing services because of the potential exposure of their listings to a large group of buyers.  The broker also has the advantage of being able to offer for sale property not listed exclusively with that broker.  If another member of the multiple listing service finds a ready, willing, and able buyer, both the listing and the selling brokers share the commission.


Listing agreements end when any of the following conditions or situations occur:

(a) THE SPECIFIC EXPIRATION DATE ARRIVES – Most listing agreements contain a specific time for termination of the agreement.  If no specific time is set, a “reasonable” time (up to one year), which the courts determine by the facts and circumstances of each case, will apply.  Negotiations for a sale pending at the date set for termination will extend beyond the termination date if the owner is aware of and consents to such negotiations.  All exclusive listing agreements in Georgia must have a fixed date of expiration.
When the listing expires, the agency created by the listing ends.  The parties can create an exception to this rule by inserting a clause in the listing agreement that extends the period of the agency for prospective buyers with whom the broker was negotiating before expiration.
(b) THE BROKER PERFORMS CONTRACT OBLIGATIONS AND CLOSING OCCURS – The listing agreement ends when the broker finds a ready, willing, and able buyer and the transaction closes.
(c) THE SELLER UNILATERALLY TERMINATES THE AGREEMENT – The owner may end a listing agreement at any time.  However, depending on the terms of the contract, the owner may be liable to the broker for a sales commission, expenses, attorney fees, and/or other costs.  The reasons for the seller’s request to end the listing may include:
(1) cancellation of a job transfer;
(2) the house the seller wanted to buy is no longer on the market;
(3) the parties are no longer getting a divorce;
(4) death of a spouse or family member; or
(5) financial reversals.
(d) THE BROKER AND THE SELLER MUTUALLY AGREE – If the seller and the broker agree that the seller’s desire to end the listing is reasonable, the broker may elect to release the seller rather than forcing the seller to terminate the listing.  A release usually provides for mutual resolution of costs and duration issues; a termination may not.  In any event, it is the broker’s decision whether to release the seller from the listing agreement.  Good practice dictates that such a release be in writing.
(e) THE BROKER UNILATERALLY CANCELS THE AGREEMENT – The broker may cancel the agreement without the consent of the owner, but may be liable to the owner depending on the terms of the listing agreement.
(f) THE PROPERTY IS DESTROYED – Destruction of the property will ordinarily end the listing agreement.
(g) THE BROKER DIES, CEASES BUSINESS, OR SUFFERS A LICENSE SUSPENSION OR REVOCATION – If the broker dies or goes out of business; or if the Commission suspends or revokes his or her license, all the broker’s listings end if he or she operates as a sole proprietor.  If the brokerage firm is a corporation or partnership and the qualifying broker dies or has his or her license suspended, the listings do not terminate.  However, if the corporation or partnership dissolves, the listings will then terminate.