Which of the following best describes a listing agreement in real estate?

A listing agreement in real estate is fundamentally a document that outlines the terms of the relationship between the seller and the broker concerning the sale of the property. This agreement specifies important details, such as the listing price, the duration of the listing, and the obligations of both parties. It provides the broker with the authority to market the property and earn a commission upon the successful sale, ensuring that both the seller's and the broker's interests are clearly defined and legally binding.

In contrast, setting commissions is not dictated by law but can be negotiated between the parties involved. An informal agreement lacks the specificity and legal enforceability found in a formal listing agreement, which can lead to misunderstandings and disputes. Lastly, an obligation for buyers to purchase regardless of conditions misrepresents typical market practice, as buyers usually have the right to make decisions based on their preferences and the stipulated conditions of sale. Thus, the second option accurately reflects the nature and function of a listing agreement in real estate transactions.