What to Know Before Signing a Listing Agreement

Do you know what are the things to know before signing a listing agreement? The listing agreement is not a small contract. It is a very crucial document. You are handing in your business details to a third party only based on trust.

But before trusting a third party you should also look into the listing agreement before signing it. The listing agreement includes all the important clauses and agreements of a contract.

As a business head, you have to go through every single point before affixing your signature on it. There are essential things you have to cross-verify before signing the contract.

Many people do not know what an individual must know before signing a listing agreement. Today we shall help you with the main points to look at in a listing agreement before entering into the contract. Let’s get started!

Read more: How Much Do Business Brokers Charge in Florida

Points to know before signing a listing agreement

1. Tenure of Agreement

The very first thing that you have to look at is the tenure of the agreement. Make sure to check the start date and the end date of the contract. The tenure of the contract can be mutually agreed upon.

The contract can last from 6 months – 2 years. Now, this completely depends on the agreeing parties of the contract. But make sure that this clause is also looked upon before signing up.

2. Rate of commission

The rate of commission is an important factor that one has to check before signing a contract. The rate of commission is typically between 10 – 15% of the total net worth of the business. However, the same can be negotiated between the parties.

The rate of commission or the “Success Fee” is a must to be a part of the listing agreement.

While signing a listing agreement make sure the rate of commission is as per the agreement between you and the broker. Sometimes, the rate of commission gets changed in the listing agreement at the time of signature.

In order to avoid such misunderstandings make sure to check the percentage in the listing agreement before signing the same.

Read more: What is Business Broker Listing Agreement – Complete Detail

3. Type of agreement

It is essential to check the type of document that you are getting into. Most of the time the contract signed between the parties is an exclusive contract.

And this is the contract that is always in the favor of the broker when it comes to commission. But if you are someone who is looking for a non-exclusive contract then you got to be sure about it.

While signing the listing agreement make sure that the type of contract you are getting in is non-exclusive. This has to be clearly mentioned in the contract. Sometimes, brokers mention exclusive agreements on the contracts.

In such cases, the business owner becomes liable to pay the commission to the broker as per the law. Thus, make sure to check the type of agreement you are getting into.

4. Any additional charges

Look if the agreement specifies any additional charges. Sometimes, besides commissions, the broker also includes additional charges on the contract. Read the term carefully and discuss with your broker the extra charges mentioned in the contract.

5. Medium of marketing

Check with your broker about the medium of marketing that he will be used to list your business for sale. It is important to know the marketing strategies of the broker to analyze the potential of your deal.

6. The consequences of malpractice

The contract should mention the penalties if there is any breach of contract from either of the parties. This is a very important point that needs to be gone through first.

Hope you learned about the things to know before signing a listing agreement. If you are looking for a trustworthy business broker then there is none better than KMF Business Advisors.

How KMF Business Advisors can help you in Signing a Listing Agreement

The transparency policy of KMF Business Advisors is something that makes the company different from others. The clause of the listing agreement is clearly mentioned in the document. Every single agreement is kept open with the final statement of the clauses.

One can sign the contract without any hesitation or second thought.

If you want to know more about how KMF Business Advisors can help you sign a listing agreement get in touch with the company.

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