Key Takeaways
• It is an "Exclusive Right to Sell" agreement, which means you are hiring a single brokerage that is contractually guaranteed compensation if the home sells during the agreed-upon term, no matter who finds the buyer.
• Key terms are negotiable because this is not a government form; specifically, the commission rate and the length of the contract can and should be negotiated between you and the broker.
• Sellers must make a new, critical decision in Paragraph 5 regarding compensation: either offer to pay the buyer's agent out of a total commission (Option 5A) or agree to pay only your own listing broker's fee (Option 5B).
• You are legally responsible for disclosing any known property defects and agree to indemnify (cover the legal costs of) your broker for any damages that result from you providing incorrect information or failing to disclose an issue.
Welcome to the starting line for selling your home. The Texas Residential Listing Agreement is the foundational contract that kicks off the entire process. It’s the binding agreement between you and your real estate brokerage that lays out the game plan for getting your property sold. You are not selling your house with this form; you are hiring a professional to help you sell it. Think of it as a job description for your real estate agent, ensuring everyone is on the same page from day one.
In the past, various types of listing agreements existed, often causing confusion. Today, the real estate industry has standardized on the "Exclusive Right to Sell" model for a simple reason: it ensures your agent can fully invest their time and money in marketing your home to its maximum potential. This means you have chosen one specific brokerage to represent you. This structure motivates them to spend on professional photography, online advertising, and other marketing efforts because it contractually guarantees that if the home sells during the agreed-upon timeframe, their work will be compensated. It aligns everyone’s goals toward achieving the best possible price for you.
It’s also important to know that this is not a government form. The Texas Real Estate Commission (TREC) does not write or require this specific agreement. It is provided by the Texas REALTORS® association for its members. This distinction is vital because it means key terms—most importantly, compensation—are negotiable between you and your broker.
Key Terms Explained
To help you understand the document, here are a few key terms explained in simple language.
• Seller: This is you, the legal owner or owners of the property. If you co-own the home with a spouse or another party, every owner needs to be listed and must sign the agreement.
• Broker: This refers to the licensed real estate company or firm, not the individual agent you are working with.
• Agent: This is the licensed real estate professional who you will be working with directly. They are sponsored by and work under the authority of their Broker.
• MLS (Multiple Listing Service): This is the private online database that real estate agents use to share information about properties for sale. It is the single most important tool for getting your home in front of nearly all potential buyers in the market.
• Intermediary: This is a specific situation that arises if the same brokerage ends up representing both you (the seller) and the buyer. Texas has specific rules for this scenario to ensure fairness, which your agent will explain in detail if it occurs.
A Section-by-Section Guide to the Agreement
Let’s go through the form section by section, in the exact order you will see it.
Paragraph 1: Parties
This section officially names you as the "Seller" and the real estate company as the "Broker." A common pitfall here is failing to include every owner of the property. Make sure every single person on the property's title is listed. If a co-owner is missed, the agreement may not be legally valid because the signing party does not have the full authority to sell the property alone.
Paragraph 2: Property
This part precisely describes what you are selling to avoid any future disputes. It includes the land, the house itself (improvements), items expected to stay like curtain rods and smart thermostats (accessories), and anything you plan to take with you (exclusions). A major pitfall for sellers is being unclear in the "Exclusions" section. If you want to take the expensive dining room chandelier, you must write it down here. If an item is attached to the property and not explicitly excluded, it is legally presumed to convey with the house.
Paragraph 3: Listing Price
This is the initial asking price for your home. It is important to remember that this is just the starting point for marketing. The form's language states that you agree to sell for this price or any other price acceptable to you. You always remain in control of what offer you ultimately accept.
Paragraph 4: Term
This section sets the official start and end date for your contract with the broker. This is the period during which your agent has the exclusive right to sell your home. A client pitfall to avoid is agreeing to an overly long term, such as a full year. The length of the term is negotiable, and a typical duration is between three and six months.
Paragraph 5: Broker Compensation
This is the most important and complex section in the agreement. Following major industry-wide changes that took effect in 2024, you now have a critical choice to make. You must choose between Paragraph 5A and 5B.
• Option 5A: You agree to a total commission fee. From that total, you authorize your listing broker to pay a specified amount to the agent who brings the buyer. This structure is designed to attract the largest possible pool of buyers by offering clear compensation to their agents.
• Option 5B: You agree to pay only your listing broker's fee. Any fee for a buyer's agent is not included. A buyer would then need to pay their agent directly, or you could offer to cover that cost as a seller concession during offer negotiations. This option offers more flexibility but may discourage some buyers.
This choice has direct consequences at the closing table. The state's official sales contract (written by TREC) was updated specifically to work with this new listing agreement. Paragraph 12 of the sales contract now provides the precise mechanism for documenting how any buyer-side fees you agreed to pay will be handled at closing, creating a cohesive system from start to finish.
This section also distinguishes between when a commission is "Earned" versus when it is "Payable." The commission is technically earned the moment you sign a sales contract with a ready, willing, and able buyer. It becomes payable at the closing table once the sale is finalized and funded. This matters because if you sign a sales contract and then back out of the deal for a non-legal reason, you could still be contractually obligated to pay the commission.
Finally, the "Protection Period" clause protects your agent for a short, negotiated time (often 30 to 90 days) after the listing agreement ends. If you sell your home during this period to a buyer whom your agent introduced to the property, you may still owe the commission. However, there is a crucial exception: you owe nothing under this clause if you re-list your home with another licensed Texas REALTOR® and are obligated to pay them a commission.
Paragraph 6: Listing Services & MLS
This is where you formally give your agent permission to put your home on the Multiple Listing Service. While you can technically choose the "DO NOT File with MLS" option, this severely limits your property's market exposure. Furthermore, if you place a "For Sale" sign in your yard or post about the property online, MLS rules require your agent to enter the listing into the MLS anyway, overriding that initial instruction.
Paragraph 7: Access to the Property
This grants permission for licensed agents to show your home to potential buyers and authorizes the use of a keybox (or lockbox). This section contains an important warning: by authorizing a keybox, you agree to assume the risk for any loss or damage that might occur during a showing, unless it was a direct result of the agent's own negligence.
Paragraphs 11-14: Seller's Promises and Responsibilities
This group of sections outlines your duties. You promise that you have the legal authority to sell the property, that you will cooperate with the broker, and that you will disclose any known material defects. A critical pitfall for sellers is hidden in the powerful legal language here. You agree to indemnify the broker for "any damages, costs, or attorney's fees" that arise because you provided incorrect information or failed to disclose a significant issue. If you do not tell your agent about a past flood and the buyer later sues, you agree to cover your agent's legal costs. Honesty is always the best and safest policy.
The New Landscape: Recent Legal and Legislative Changes
The Texas real estate market is navigating a period of fundamental change. Here is what you need to know:
The 2024 NAR Settlement: This is the primary reason for the new compensation choices in Paragraph 5. The historical practice of offering buyer agent compensation within the MLS is now prohibited. This new form creates a clear, direct, and transparent way for you to decide how, and if, you wish to offer that compensation.
Banning Predatory Contracts: Texas recently passed laws to ban abusive, 40-year "right to list" agreements that some predatory companies were tricking homeowners into signing. The standard Texas REALTORS® form has always been safe, and this new law now protects consumers from these outlier contracts.
New Foreign Ownership Laws (SB 17): A new Texas law restricts citizens and certain entities from a few designated countries (currently China, Iran, North Korea, and Russia) from purchasing property. While this doesn't change the form itself, it adds a new legal dimension to the term "able" buyer. A buyer who is not legally able to acquire property in Texas is not a viable candidate, creating a new layer of diligence in the transaction.
Housing Density Laws (SB 15 & SB 840): Recent legislation is changing development rules in larger cities to encourage more housing. These laws can alter your property's "highest and best use." A single-family home on a large lot that can now be subdivided, or a property next to a commercial strip now eligible for multifamily development, may have a new, higher market value. This directly impacts your valuation and your broker's marketing strategy.
Frequently Asked Questions
Do I have to sign this?
Yes, you must sign this agreement to officially hire a licensed Texas REALTOR® and have your home listed on the MLS. It is a required step to create a formal, legal client relationship with a brokerage.
Is the commission percentage negotiable?
Absolutely. Texas law requires agents to inform you that all commissions are negotiable and are not set by any law or organization.
What if I find the buyer myself, like a friend or neighbor?
Because this is an "Exclusive Right to Sell" agreement, the broker's commission is still due if the home sells during the contract term, regardless of who finds the buyer. This is because the broker has already invested in marketing, is managing the complex transaction process, and is contractually guaranteed compensation for a successful sale.
Can I cancel this agreement if I'm unhappy?
This agreement has a set term. If you wish to cancel early, you should speak directly with your agent and their broker. Most brokers prefer to work with happy clients and may agree to a mutual termination of the agreement, though they are not legally required to do so.
Your Next Steps
You have now taken the most important step in this process: educating yourself. This agreement is the foundation for a successful and smooth home sale. Your next steps are simple. First, read over the blank form your agent provided. Second, ask questions. Do not be shy about clarifying anything you are unsure about, especially the critical choice between Paragraph 5A and 5B. Third, negotiate if you feel it is necessary. Remember that the term length and compensation are negotiable. Finally, you can sign with confidence, knowing you have a clear, professional, and mutually agreed-upon plan to get your home sold.
