An option contract can function as listing.

• A. True
• B. False
• C. Only in exclusive listings
• D. Only with a separate listing agreement

Answer: (A)

An option contract can function as listing because it creates a marketing arrangement for the property that centers on a buyer’s right to purchase within a defined period and at a set price, with the broker’s role and compensation tied to that arrangement. When a seller and broker set up an option to purchase, the broker is effectively marketing the property to potential buyers and is positioned to earn a commission if the option is exercised or if a sale occurs during the option period. The option itself can include terms about how the broker will be paid, the purchase price, and the duration, making it operate similarly to a listing contract. This means a separate listing agreement isn’t strictly required for the option to serve as the vehicle by which the property is marketed and the broker compensated. If the option expires without exercise, there’s no sale and no commission, whereas exercise leads to a sale just like with a traditional listing.