The listing agreement: a double-edged sword?

In any business relation the ideal scenario is that both parties profit from the transaction and therefore there is a win-win situation. However, this is not always the case. Some business transactions and contracts can be one-sided and this creates a great disadvantage for one of the parties. This can happen often in the relation with your realtor when selling your property in Mexico. In this case you will need a listing agreement that establishes very clearly the scope of services and the obligations and responsibilities of each party.

So in order to have a balanced contract, what should be included in the listing agreement that I’ll sign with my realtor?

Your realtor will want exclusivity for a period in which he or she will promote your property. You should check that this exclusivity period is not very prolonged as this might work against you in case your realtor is not giving results. Also you should keep in mind that the property for sale is yours and that only you, and not your realtor, will have the final decision on accepting an offer and a buyer. Any wording that limits your decision or that imposes you to accept an offer should be deleted from the listing agreement.

And what about the scope of services and the representation from your agent?

The contract should include in detail the services to be provided by your realtor. This will help establish the responsibility of your realtor and any liability in case of breach of contract or in case of negligence, malpractice or even fraud. The listing agreement can be the base document for taking your realtor to court or to press charges for criminal action. You should also be aware that in Mexico, a listing agreement is not by itself an agency agreement and does not carry representation (power of attorney). However, when you sign the listing agreement with your realtor, you should verify that there is no wording in the contract that expressively states that your realtor can act in your representation and sign contracts or engage in transactions on your behalf. Furthermore, the contract should never include a wording that states that you are granting your realtor any kind of power of attorney, as this can put you in a very risky situation.

Real estate transactions should be handled with caution and detail. The relation with your realtor will usually be the start of your real estate transaction. If the specifics of this relation are not clearly stated in a contract like the listing agreement, then you might see yourself in a situation where your realtor will be the only party profiting from your real estate deal.