Our ongoing blog series answers our clients’ most pressing questions about commercial real estate. Our previous two blogs on commercial real estate commissions, discussed the ins and outs of how commissions are paid. In this blog, we will dive into the Listing Agreement, which is the legal document used to define the transaction between a real estate agent and a commercial property owner.
The sale or lease of a commercial property in Nevada is governed by a Listing Agreement, a legal document that clearly outlines the terms of the arrangement between the owner and the Commercial Real Estate (CRE) agent. This document, which covers details such as duration of the agreement, listing price, and agent commissions, is designed to ensure transparency throughout the transaction.
There are three common types of Listing Agreements in Nevada, all of which are governed by state laws and regulations to ensure fairness for all involved. We added a fourth type as an honorable mention.
- Exclusive Right-to-Sell Listing: This is the most common type of Listing Agreement. The broker is granted the exclusive right to represent the property owner and market the property for sale or lease. The broker receives a commission regardless of who finds the buyer or tenant.
- Exclusive Agency Listing: Similar to the exclusive right-to-sell listing, but the owner retains the right to sell or lease the property themselves without paying a commission to the broker.
- Open Listing: The property owner can list the property with multiple brokers and retains the right to sell the property themselves. Only the broker who brings in the buyer receives a commission.
- Pocket Listing: This is a property listing that is not publicly advertised or listed. Instead, the property is marketed privately by the listing agent. The term “pocket listing” refers to the fact that the listing remains in the agent’s “pocket,” shared only with select clients or brokers.
The Benefits of the Listing Agreement
A well-crafted Listing Agreement provides numerous benefits to property owners when selling or leasing commercial properties in Nevada:
- Professional Representation: A Listing Agreement grants you access to the expertise of a qualified CRE agent who understands the market dynamics and has the skills to effectively market your property. This expertise ensures that your property is positioned optimally in a competitive landscape. A qualified CRE agent can also help set your expectations of what is achievable, sometimes that means telling you what you “need to hear” about values and demand, not what you “want to hear”.
- Time Efficiency: With a CRE agent handling inquiries, showings, and negotiations, property owners save valuable time and effort. The agent’s expertise enables a streamlined process, allowing you to focus on other priorities.
- Access to Qualified Buyers or Tenants: Brokers have established networks and relationships within the industry, allowing them to connect with serious, qualified buyers or tenants. This access can expedite the transaction process and reduce the time your property remains on the market.
By leveraging the benefits of a well-written Listing Agreement, property owners can achieve more successful outcomes and maximize the return on their investments, while ensuring protection for both themselves and CRE agents.
This concludes our 3-blog sequence on commercial real estate commissions. Check back for the next blog in our “Answering Our Brokerage Clients’ Most Commonly Asked Questions” series.
