Many sellers choose to work with a real estate agent or broker to market and sell their properties for top dollar. However, before signing a listing agreement, make sure you understand the different types and what they mean.
An exclusive right to sell gives one broker the legal right to sell a property. Learn about the benefits of an exclusive listing and what other listing agreement types may better suit your needs.
Understanding Listing Agreements
A listing agreement is a legally binding contract between a seller and a real estate broker that allows the agent to sell the homeowner’s property. The contract outlines the stipulations and terms of the real estate sales transaction.
Listing agreements may include the agent’s role, how they plan to bring buyers to the property, the agent’s fees and commissions, and the length of the legally binding contract.
Types of Listing Agreements
Here are a few of the most common types of listing agreements:
- Open Listing: Open listings allow multiple real estate agents to sell a property. The agent who brings a buyer to the sale earns a commission, while the other real estate agents receive nothing.
- Exclusive Agency Listing: An exclusive agency listing is similar to an exclusive right to sell in that only one broker or agent has permission to sell the property. However, unlike with an exclusive listing, the seller does not pay a commission with an exclusive agency listing.
- Multiple Listing Service (MLS): An MLS is an agreement in which a contracted agent submits the property to a private database shared with multiple brokers from various agencies. The agent doesn’t show the property or receive a commission.
- Exclusive Right to Sell: Exclusive listings offer full service, including marketing and negotiations. If the property sells, the seller owes the specific real estate agent a commission, even if someone else brings a buyer to the sale.
What is an Exclusive Right to Sell?
An exclusive right to sell is a listing agreement that gives a specific broker or agent the sole right to market and sell a property. The agreement also guarantees the exclusive agent a commission upon a successful sale of the home.
Key Features
An exclusive right to sell means the seller cannot work with another agency or broker during the contract term. The agreement also requires a broker commission, regardless of who brings a buyer to the property. The exclusivity agreement is valid until the contract expires.
Benefits for Sellers
An exclusive right to sell offers a few excellent benefits for sellers, including the following.
Dedicated Marketing Efforts
Since they have exclusive rights, the real estate agent or broker may be more dedicated to marketing and selling the property to ensure an efficient sale.
Expert Guidance and Negotiation
An exclusive right-to-sell listing agreement means the real estate agent or broker handles all aspects of the sale, from listing the property to negotiations and, finally, until the sale is closed. The listing agent agrees to handle all paperwork, agent negotiations, and closing processes, making selling easier for the homeowner.
Wider Market Exposure
Real estate agents have access to certain marketing channels that can bring the seller more potential buyers. The agent may submit the property to the MLS, use yard signs, or market it through their online presence. They may also work with other brokers to cross-share the property and schedule more showings.
Potential Drawbacks for Sellers
Of course, it’s important also to be aware of the potential downsides of agreeing to an exclusive right to sell listings. Here are a few considerations.
Limited Flexibility
An exclusive right-to-sell agreement can limit flexibility. The seller can only work with one agent, which could mean less marketing. The agreement also entitles the listing agent to a commission, regardless of who brings the buyer to the property. Even if the seller secures a buyer, they will still owe the listing broker commission and realtor fees.
Choosing the Right Broker
Working with an exclusive agent may work for some sellers. However, before signing an exclusive listing agreement, be sure to choose the right broker. You want to choose a real estate agent with a good track record in your area. You also want someone with a streamlined selling process that can help you secure a potential buyer faster.
Key Considerations Before Signing
Before signing an exclusivity agreement, consider the following factors.
Terms and Duration of the Agreement
Before signing, carefully review the exclusive listing contract, including the listing price, the real estate agent’s commission rate, and the contract length. The best agents are willing to answer questions and explain the contract in detail.
Cancellation Clause
Many exclusivity agreements include cancellation clauses, which outline the specific stipulations that allow a seller to exit the contract prematurely.
In some states, the broker must agree to terminate the contract prematurely. Reasons for canceling an exclusive right-to-sell agreement might include poor performance, the seller’s decision to no longer sell, poor communication, or unethical behaviors.
Before signing, review the cancellation clause in detail and find out what situations allow you to cancel the right-to-sell agreement.
Marketing and Communication Expectations
With an exclusive listing, sellers rely on a dedicated agent to market and show the property. Before giving any one real estate agent the exclusive right to sell your property, make sure you set clear marketing and communication expectations.
Find out how the agent sells properties, including what marketing channels they use. Learn more about their work schedule and how quickly they respond to an interested buyer’s agent.
How well your agent markets the property and how frequently they show it to qualified buyers directly impact how fast the house sells. By choosing the right agent, you can increase your chances of a successful sale.
Alternatives to Exclusive Right to Sell
An exclusive agreement may only work for some sellers. If exclusive agency listings don’t work for you, here are a few alternatives that may better fit your situation.
Open Listing
An open listing allows the property owner to work with multiple agents. It also allows the homeowner to sell the property themselves without being obligated to pay commission fees. This listing agreement type may be ideal for sellers who understand the local market well or live in a high-demand market.
Exclusive Agency Agreement
An exclusive agency agreement is a contract that gives a single agent or broker the right to sell a property. However, if the agent does not find buyers, they are not owed commission fees. This arrangement allows the seller to bring their own buyer to the property and avoid paying a commission.
Reviewing the Listing Agreement
Whether you choose an exclusive right to sell or an open listing agreement, it is always a good idea to have a real estate attorney review the contract. In most cases, the broker receives a commission after the home sells. However, commission eligibility may vary depending on the listing type.
Protect your legal rights and enjoy a more convenient real estate process by seeking legal counsel.
Choosing the Right Sales Approach
An exclusive right to sell gives one agent the sole right to sell a property. While exclusive listings offer sellers many benefits, there are also some key factors to consider before signing a contract.
Home sellers should do their due diligence and understand the implications of an exclusive listing offer, including how this agreement may affect the final sale price.
Contact A-List Properties today at (972) 526-7042 for a free cash offer on your home. You can also fill out our online form to receive a cash offer.
Zach Shelley
Zach Shelley is a seasoned real estate investor with a diverse network spanning across the nation. As the founder of his own real estate venture, Zach is committed to offering innovative solutions to homeowners facing various real estate challenges.. Through his dedication and strategic approach, Zach continues to make a significant impact in the real estate industry, providing homeowners with alternative pathways to navigate their property transactions.
