What is an exclusive agency listing?
What does an exclusive agency agreement entail?
How is it different than an exclusive right to sell?
In this article, we will break down the notion of “exclusive agency listing”, so you know all there is to know about it!
We will look at what an exclusive listing agency means, see how it works in practice, look at exclusive right to sell vs exclusive agency, look at the benefits and drawbacks of having an exclusive agency, different types of listing such as open listings, exclusive right listings, probate listings and more!
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What is an exclusive agency listing
An exclusive agency listing or exclusive agency is a type of agreement where a homeowner or real estate property owner agrees to be represented by one real estate agent or broker while at the same time maintaining the right to sell the property directly and without having to pay any commission.
In other words, the property owner will have an exclusive contract with one real estate agent for a specific period of time for the sale of the property and, in parallel, will make efforts to find a buyer directly as well.
In this context, we call the real estate broker or agent the “listing agent” or “listing broker”.
If the broker sells the property during the exclusive agency listing, the homeowner will have to pay the real estate agent’s commission provided the buyer was found by the listing broker.
However, if the buyer was found by the seller, the homeowner will sell the property without having to pay any commissions to the exclusive agent.
There are other scenarios when a listing broker will collaborate with another real estate broker to sell the property during the exclusive agency listing period.
In that case, the “listing broker” will share the sales commission with the selling broker.
Exclusive agency listing definition
How do you define exclusive agency listing?
What is an exclusive agency definition?
According to Redfin, an exclusive agency listing is defined as:
An Exclusive Agency Listing is an agreement between a seller and a real estate firm or agent granting the firm or agent the right to be the only firm or agent to market and sell a property, except the seller retains the right to market and sell the home to a buyer without having to pay a commission to the listing agent, if the seller finds the buyer independently of the agent or firm.
In other words, it’s a mutual collaboration agreement between a real estate agent and a property owner to sell the property.
If the agent sells the property, the agent will get compensated based on the agreed-upon commission.
If the seller finds the buyer, the seller will not be required to pay any commission or compensation to the listing agent.
An exclusive agency contract or an exclusive agency listing allows an exclusive agent to work in collaboration with the seller to sell the property.
The arrangement is favourable to both the exclusive real estate agent and the homeowner.
It’s like a hybrid between a For Sale by Owner (FSBO) and an exclusive-right-to-sell arrangement.
An FSBO is when the buyer does not have a broker will not have to pay any real estate sale commission in the event of a sale.
An exclusive-right-to-sell agreement is when the broker or real estate representative gets a commission for the sale of the property no matter where the buyer comes from (from owner, real estate agent or any other source).
The real estate broker is guaranteed a commission when the property is sold during the listing agreement.
In an exclusive agency, the exclusive real estate broker sees a benefit as he or she is able to get an exclusive listing to sell a property.
This is better than having no listing at all!
The broker will earn a real estate commission if he or she is the one who brings the buyer.
On the other hand, the arrangement is also suitable for sellers as they have the right to sell the property by themselves if they can find a buyer by themselves.
In that case, the seller will pay no commission to the real estate listing agent.
Exclusive right to sell
What is the difference between an exclusive right vs exclusive agency?
An exclusive right can also be referred to as an exclusive right to sell (both terms are used interchangeably).
An exclusive right to sell is a type of exclusive agency agreement or arrangement between a real estate property owner and a real estate broker, agent or representative where the real estate broker will receive a commission for the sale of the property no matter where the buyer comes from.
In other words, whether the real estate agent was the one who found the buyer or someone else (like the seller or other sources), the real estate agent will get a commission for the sale.
An exclusive right to sell arrangement is a more favourable listing agreement for the broker versus an exclusive agency listing or exclusive agency.
What is the difference between an exclusive agency and open listing?
An open listing is a type of listing agreement where more than one real estate broker or agent is mandated to sell the property.
The seller also has the ability to sell the property directly on the market without having to pay any commission.
In this type of listing arrangement, the real estate agent who brings the client will get compensated by the seller.
The first agent that brings a client and the seller agrees to sell to that client, the agent gets a commission.
A drawback to this type of arrangement is that the listing brokers must manage their contacts quite well to ensure that one broker does not end up with the prospect or buyer of another.
Also, since the seller is working on a non-exclusive basis with multiple agents, the real estate brokers do not have an incentive to spend money or put in a lot of time promoting a property where they may not get any future compensation.
What does a probate listing mean?
A probate a type of listing a property is put on the market for sale following the death of the homeowner or seller.
Generally, the estate representing the deceased seller will grant a full mandate to the broker for the sale of the property at the best possible price with the least effort on the side of the heirs.
Exclusive agency agreement
What is the exclusive agency agreement definition?
An exclusive agent agreement is an actual agreement between an exclusive realtor and a property owner outlining the terms and conditions of the understanding of the parties.
The goal under an exclusive agency contract is for the exclusive agreement real estate agent and the seller to agree on the terms of the listing and when the agent will earn a commission from a sale.
Typically, this agreement is in writing to ensure that the parties have a clear understanding of the terms and conditions of the exclusive listing.
Exclusive agency benefits
There are a number of benefits to working under an exclusive seller agency arrangement.
According to the National Association of Realtors, only about one-quarter of property owners are able to sell their homes by themselves.
In essence, more than three quarters will use (or eventually use) the services of a real estate agent or broker to sell their home.
In this context, having an exclusive agency listing gives the seller access to the Multiple Listing Service (MLS) providing a large database of potential leads.
Here are some of the advantages of an exclusive brokerage listing:
- Higher level of loyalty between the real estate agent and the seller
- The broker has an interest in putting time and energy to sell your home
- Having an exclusive agency in real estate provides more visibility to the seller’s home
- Seller gets professional real estate marketing services
- Seller has the ability to sell without having to pay a commission
Exclusive agency drawbacks
An exclusive agency listing agreement can have some drawbacks.
In essence, it’s important to track the source of the buyer.
Was it the real estate agent who brought a particular prospect or was it the seller?
This is important as the real estate agent’s commission is linked to the origin of where the buyer is coming from.
To ensure fair compensation, real estate agents must monitor and track all contracts so there is no conflict between them with the seller in the event the property is sold.
The idea is for the broker to keep evidence that the buyer originated through him or her and not the seller directly.
Many real estate brokers do not like or enjoy having to track all contacts to gather evidence on the origin of the buyer.
Also, a person who may have reached out to the broker today may eventually reach out directly to the seller a few months down the road making the real estate broker’s commission more “contentiously earned”.
What is an exclusive agency in real estate?
Why should you sell your home using exclusive agency listings?
What is the difference between an exclusive agency and exclusive right to sell?
An exclusive agency listing or exclusive agency is a type of agreement between a real estate owner and a real estate agent, broker or representative to sell a property through one exclusive agent while at the same time the owner having the ability to sell the property without having to pay any real estate commission to the agent.
A real estate exclusive listing is a hybrid arrangement between an exclusive right to sell vs exclusive agency.
An exclusive right to sell is when a property is sold through an exclusive realtor and where the agent gets a commission no matter from what source or origin the buyer is found.
With a real estate exclusive listing, the seller will only be required to pay the exclusive broker when the broker finds the buyer through his or her own channel.
Sellers who are included to test the real estate market and try to sell the property while having a real estate professional engaged may be interested in getting into an exclusive agency listing.