What is a "listing agreement"?

A listing agreement is defined as a formal contract between a property owner and a real estate broker. This contract outlines the terms under which the broker is authorized to sell or lease the property on behalf of the owner. The listing agreement typically details vital aspects such as the sale price, duration of the listing, commission structure for the broker, and the responsibilities of both the owner and the broker.

In essence, it is a professional arrangement that serves to protect both the broker's interests and the property owner's rights, ensuring that all parties are clear on the expectations and commitments involved in the transaction. This contractual relationship is crucial in the real estate process, as it formalizes the broker's ability to market the property and negotiate on behalf of the owner.

The other options represent informal or inadequate arrangements that lack the legal binding nature of a listing agreement. A verbal agreement between friends might lack clarity and enforceability, while an informal understanding about property management does not hold the same contractual weight as a listing agreement. A mutual agreement between multiple brokers typically refers to cooperation among professionals rather than a direct contract involving a property owner.