Also known as: listing agreements · listing contract
Written by attorneys · grounded in primary & secondary sources — see below
A contract by which a property owner employs a real estate broker to market and sell the property. The agreement sets the broker's authority and the conditions under which a commission becomes due, commonly upon production of a buyer ready willing and able to purchase on the seller's terms or upon execution of a sale contract.
Select any source to read its text and confirm it supports the definition.
Lamar Lewis listed his commercial building with Landmark Realty under a written agreement stating the broker would earn a commission upon producing a buyer ready willing and able to purchase on Lewis's terms. Landmark located Lena Lawson who signed a written commitment matching the full asking price and all other conditions. Lewis then refused to proceed and sold directly to Lawson months later. Landmark sued for its commission.
Lars Lindstrom and Lillian Locke as sellers signed a written listing agreement with Metro 100 Realtors. The agreement permitted multiple listing and subagency. Broker-agents from The Vaughn Company acting as subagents produced a buyer and the sale closed. The buyers later challenged the commission award arguing no direct written agreement existed with the subagents.
A broker earns the commission when the listing agreement so provides. Many agreements state that the commission is due upon production of a buyer ready willing and able to purchase on the seller's terms. Execution of a binding sale contract may also trigger the right depending on the agreement language. The seller cannot defeat the right by later refusing to proceed in bad faith.
Many states require listing agreements to be in writing. The requirement protects both parties by clarifying the terms of the broker's employment and the conditions for earning a commission. Oral agreements may still create agency duties but often fail to support a commission claim.
The broker remains entitled to the commission if the listing agreement conditions payment on production of a ready willing and able buyer. The seller's bad-faith refusal to execute or perform the sale contract does not defeat the broker's right. Courts protect the broker from the seller's opportunistic avoidance after the broker has performed.
A subagent may recover when the primary listing agreement authorizes multiple listing and subagency. The subagent stands in the shoes of the listing broker and satisfies the same conditions for earning the commission. The absence of a separate written agreement between seller and subagent does not bar recovery when the primary agreement permits the arrangement.