What does the term bilateral contract signify in a listing agreement?

A bilateral contract in a listing agreement signifies that both parties involved—the seller and the broker—have specific obligations to fulfill. In this context, the seller agrees to pay the broker a commission for their services in selling the property, while the broker commits to using their skills and resources to market the property and facilitate the sale. This mutual exchange of promises creates a binding agreement where both sides are responsible for upholding their parts of the deal.

Understanding the nature of bilateral contracts is crucial in real estate because it emphasizes the legal commitment that both parties have, which can influence the dynamics of the transaction and the expectations each party should have concerning their duties and responsibilities.