Exclusive Right to Sell Defined in Real Estate

By
Real Estate Agent with RE/MAX Executive Realty 91362

If you're like most people, you will call a real estate agent for guidance and expertise in selling your home. If you're wise, you will interview more than one real estate agent.

Getting multiple marketing plans proposed by various agents makes sense. Not every agent does the same things or offers the same services when selling a home.

When you ultimately decide on which agent to choose, you will be presented with likely be presented an exclusive right to sell listing agreement. The meaning of the exclusive right to sell in real estate is different than what it used to be years ago.

When I first broke into the business in 1986, an exclusive right to sell meant you would be the only person who would have the chance to sell the property. Other real estate agencies did not have the opportunity to cooperate with you.

It would be a pocket listing that only a select few people knew about. Boy, was that a terrible way of doing business. It did not serve the seller's best interests as the home's exposure was limited.

Today the meaning of exclusive right to sell is much different.

What is an Exclusive Right to Sell Contract?

In real estate sales, the exclusive right to sell contract is the one used in the vast majority of all transactions. A seller will grant the listing agent a contract to sell their property by signing an exclusive right to sell contract.

This means you can't hire another real estate agent as long as your contract is in force. The agent you've signed a contract with is the only person who can market your property. All potential home buyers must go through the listing agent during the contract period.

Generally, the exclusive right to sell contracts will spell out the fact that the listing agent will agree to cooperate with other real estate brokerages. If another company procures a buyer, the listing agent agrees to work with them.

Typically, the Realtor's commission will be split equally between the listing agency and the buyer's agency. So, in today's real estate environment, an exclusive right-to-sell agreement does not create an off-market listing but one that is shared among thousands of real estate agents through the multiple listing service.

Real Estate agents get compensated by bringing a buyer to the table for the seller.

What is an Exclusive Agency Agreement?

An exclusive agency agreement differs slightly from an exclusive right-to-sell contract. With an exclusive agency, the homeowner is able to procure their own buyer. The seller has the best of both worlds because they have a real estate agent working hard for them while also retaining the right to find their own buyer.

Many real estate agents frown upon this type of listing agreement because they can put in a lot of work and end up with no commission. The seller could get lucky and find their own buyer. The agent would be out of luck.

There is a way around this, and it is often something I will do myself when this topic comes up. If the seller is able to find their own buyer, I will offer to charge the seller a half commission.

I will still perform all of the same functions I usually would for the seller. They get all my services and representation but only pay half the fee. It is the best of both worlds for them.

What is an Open Listing?

Open listings are far rarer and not looked upon favorably by real estate agents. A home seller can work with multiple real estate agents with an open listing. The real estate agent who procures the buyer will be the one who gets paid.

Other agents who have invested time and money will see no return. Most real estate agents will shy away from this type of listing arrangement.

Benefits of an Exclusive Right to Sell Listing Agreement

Beyond the fact that it is the most common way real estate agents do business, you want a dedicated professional who will be working hard for your best interests. Picking an exclusive agent is an essential task and one that should not be taken lightly.

Since you will be signing a contract that is probably going to be between 3-6 months, you should go through an interview process with multiple agents. It will be vital to know everything the agent will do for you.

For example, will they hire a professional to take the photography or do it themselves? Will they be providing market material such as color brochures? Will a video tour be included?

How will communications be handled? Will you be speaking with just the agent you hired or someone else?

Can You Cancel an Exclusive Right to Sell Contract?

Most real estate contracts don't give you the right to cancel them and start working with another real estate agent. However, you can withdraw your home from the multiple listing service (MLS) and the market anytime, even when you receive an offer.

Some real estate agents are willing to put a termination clause in the agreement that will allow a seller to escape. However, don't expect this as it is not commonplace.

If you find the relationship is not going well and want the contract terminated, speak to your agent. If they are not willing to cancel, speak to the owner of the real estate company.

Most owners are smart enough to realize that an unhappy client is not good for future business.

Final Thoughts on Real Estate Contracts

If you decide to work with a real estate agent under an exclusive right-to-sell contract, ensure the person you've chosen fits your needs.  The best real estate agents will put the client's best interests over their own.

From being in the industry for many years, I would highly recommend you stay away from an agent who practices dual agency. A dual agent doesn't work for you - they become a neutral party. Insist on an agent who will remain your fiduciary throughout the transaction.

Someone who will go the extra mile to ensure you get the best real estate experience. Also, keep in mind that a Realtor is different from a real estate agent. Realtors must follow a strict code of ethics and are members of The National Association of Realtors.

 

Posted by

Bill Gassett is a thirty-two year veteran to the real estate industry. He enjoys providing helpful information to buyers, sellers and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, National Association of Realtors, Inman News, Placester, RESAAS, Credit Sesame and others.

Comments (2)

Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Bill  and thank you for sharing your great information here in the Rain.  Make it a start to a great week.

 

Sep 26, 2022 09:32 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker
Great information, thanks for sharing.  I hope you have a great day.
Sep 27, 2022 03:26 AM