The Listing Agreement...
...The listing agreement is required to create the agency relationship between the seller and the broker. State of Wisconsin license laws do not allow any agent to present property to a prospective buyer without a signed agency contract. It is unlawful to work or negotiate on behalf of the seller without a written contract in place. Sometimes practiced, but not allowed, is the showing of "For Sale By Owners" on a verbal agreement.

Another practice seen, but not allowed by license law, is when an attorney and / or a bank offer an "open listing" to the real estate companies in town. This may not be a verbal arrangement. Even if the listing is an "open one" it must be signed before the broker may begin marketing of the property (see RL 24.04-RL24.08 and RL 24.025) unless the broker is the selling broker under a listing broker with a signed listing or broker has a signed agency agreement with the buyer.

Listing brokers do not have a duty to pre-qualify buyers. If listing agents elect to pre-qualify, selling agents must follow lister's lawful orders to provide known information on buyers' financial position.

A broker may not have a sign on any property unless a valid listing contract is in effect. To have a sign in front of a property that isn't listed is a violation of state law.

The seller must be informed if the licensee does not have expertise in the required area. For instance, if you are selling a large commercial complex, a shopping center, a factory, or perhaps a bowling alley, RL 24.03 requires a licensee to retain the assistance of persons competent in the area. This is also covered in the Code of Ethics and the Standards of Practice.

It is not appropriate for any agent to discuss your listing while you are listed with another company/agent. However, if you institute the call to another broker, the broker you called may discuss your listing. It is not appropriate for that agent to disparage another brokers pricing, marketing or procedures.

MLS, in my opinion, is an extraordinary tool for the marketing of your property. Statistically, 65% - 75% of the transactions sell cooperatively. It makes sense to be included.

Listing Protection. The protection of buyers recognizes that the efforts of the broker have a carry-over effect in getting the property sale. This period, presently one year, is consistent with the purpose of the protection clause.

To qualify as a protected purchaser, there must either be negotiation with the purchaser during the term of the listing contract OR the property must be shown to the purchaser during that time. To qualify, the negotiation or showing may be conducted by the listing broker or, sub-agents. For this reason, the listing broker is wise to get prospects names for co-broke showings.

Negotiation, for the purposes of protection is clearly more than casual conversation or mailing a data sheet. (E.M.Boerke, Inc V, Williams (1965) 28 Wisconsin 2d 627, 632; quoted in Jessup v. LaPin (1967) 35 Wisconsin 2d 186,192.)

The exclusion wording also limits the exclusion to the extent of the prior broker's rights so a listed prospect who is not really qualified for protection is not excluded from the second broker's listing (Legal Update #88-4)

Sellers have the power to revoke a listing contract at any time. This is because an agency contract, such as a listing, is a personal service contract based upon agency relationship with the broker. It can be revoked by verbal notice, by written letter or by an amendment. The power to revoke, however, is not a right to do so. Canceling a listing contract may violate a broker's rights under the contract. In that event, the broker may demand compensation for damages. In general terms, this might include reimbursement for expenses incurred by the broker, i.e. cost of newspaper ads and a reasonable amount for broker's time and service. (See Legal Update 97.05 and Civil Jury Instructions #3740.)

Sellers have the power to revoke a listing contract at any time. The listing is a personal services contract which establishes a fiduciary relationship of trust and confidence with the broker. Because the contract reflects the agency relationship, the seller possesses the power to revoke or terminate the listing contract at any time. The seller (the principal) cannot be compelled to remain in the agency relationship with the broker (the agent) with whom the seller no longer wishes to work.

The power to revoke or cancel the listing contract, however, must be distinguished from the right to do so. The seller always has the power to cancel the listing contract but may not have the right to declare an early termination to the listing. Canceling the listing before its expiration date will typically constitute a breach of the contract terms and thus violate the broker's rights. The broker may then demand compensation for the damages sustained as a result of the early listing cancellation. The broker cannot, however, sue the seller for specific performance because of the agency relationship.

These damages may include the costs of advertising, reimbursement for other expenses incurred by the broker in the process of listing and marketing the property, and the value of services rendered, assuming the broker can sufficiently prove this. Commission will be due only if the broker can prove that the broker had procured a buyer ready, willing and able to purchase the property upon the terms and conditions specified in the listing contract, or on terms otherwise acceptable to the seller.

Note that some brokers are adding provisions to their listing contracts specifically describing a procedure for the early termination of the listing. If so, as long as the seller follows the contract provisions for termination, the seller may generally cancel the listing without fear of being charged for any damages. That is not the case, however, if the early termination provision calls for an early termination fee or other damages.

Note also that the seller may cancel the listing without risk of damages if the termination is for cause. For example, if the listing broker fails to perform according to the terms of the listing contract or otherwise fails to act in good faith, then the seller will have the right, not just the power, to terminate the listing. Then the broker cannot claim any damages based upon the early termination because the broker was in breach of contract.

The seller may terminate the listing by verbal notice, by written letter or notice, or by amendment of the listing contract (changing the expiration date to a current date). Upon receipt of such notice from the seller, the broker has no right to refuse the seller or exact any price or penalty (other than the damages which may be sought in litigation) for the cancellation unless originally stated in the listing contract.

Once the seller has notified the broker that the listing is terminated, preferably in writing, the seller is free to list the property with another broker. The first listing broker will have no further rights with respect to the listing, other than any listing protection or override rights it establishes with respect to properly qualified buyers.

One common source of confusion in this regard surrounds the use of the term "withdrawal." Some may interpret the term to mean that the listing contract is still in effect but that the property is being temporarily withdrawn from the MLS and other active marketing. Others will interpret this term to mean that the listing contract is completely canceled and the seller may list with another broker. Accordingly, use of this term is to be avoided. If the term is used, clarification should be immediately sought to avoid headaches down the line.

Read the listing contract carefully. Representations pre-printed and/or written into the contract are binding. The verbiage clearly explains the nature and extent of the agreement.

The "Revocation Explanation" is from the WRA Hotline newsletter.

NOTE: It is always advisable to consult an attorney regarding any of the matters discussed above. This explanation is meant to be a discussion of the listing contract but cannot be deemed to explain any specific contract or circumstances.