Last month, we signed a six-month listing agreement with a real estate broker to sell our home. When our son found out that we were selling our home, he immediately said he would buy it. He now has the financing for the purchase, and he doesn't want to do an inspection because he trusts us. When we told our real estate broker the good news that now we didn't need him to sell the home, he said we still owed him the 5% commission in the listing agreement. How can we owe this 5% commission when our real estate broker didn't show our home to one potential buyer?

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There are three types of listing agreements: (1) exclusive right to sell, (2) exclusive agency and (3) open. An exclusive right to sell means that any sale of the home during the term of the listing agreement will obligate the homeowner to pay the agreed commission to the real estate broker. An exclusive agency means a real estate commission is owed by the homeowner on any sale of the home, unless the homeowner produces the buyer of the home. An open listing is more common in commercial transactions, and means that the seller will only owe a commission if the broker produces a buyer. For example, the owner of an office building may sign "first come, first serve" open listings with three different brokerage firms.

Most listing agreements for homes are exclusive right to sell. Although you should read your listing agreement carefully, you probably owe the 5% commission. Many brokers in these circumstances, however, are willing to negotiate a reasonable settlement.