Is giving the exclusive right to sell a good idea for you?

Looking to sell your house? Giving an experienced real estate agent or company the exclusive right to sell your home may be a good idea. 

We understand that a home seller today has many avenues to put their real estate on sale and promote it – thanks to modern digital technologies. However, sometimes, signing an exclusive agreement with a single real estate brokerage may benefit both you and the agent. After all, the charm of a guaranteed commission is enough to motivate an agent to sell your property as soon as possible and for a profit. At other times, such types of contracts may not be the right fit for you. An open listing with multiple real estate agents to try to sell your home may be more beneficial to your case. So, which decision will benefit you more? Let’s find out here. 

What is an exclusive right to sell in the real estate industry?

An exclusive right-to-sell agreement is giving a particular real estate agent or company the exclusive job of selling a house for you. This means they’re the only ones allowed to list the house on the market and sell it. This type of listing agreement is a clear and serious promise between the property owner and the agent – authorizing the agent to have the only right to sell the house for a certain amount of time. This kind of agreement helps make sure the agent works hard to sell the house.

Once the agreement is set up between the two parties, any potential buyer (or the buyer’s agents) must reach out to that particular seller’s agent for any kind of transaction.

What are the key elements of an exclusive right to sell agreement?

Here are some important factors to consider in this type of real estate agreement. 

It has a set contract duration

The agreement typically has a defined time frame for the agent or agency to sell the property. This period is negotiable and can vary anywhere between 30 days and six months. During this time, the agent or a listing broker is guaranteed a commission. Such an arrangement ensures a timely and efficient home sale.

The contract is based on commissions

The agreement outlines the commission or fee that the real estate agent or broker will earn upon the successful sale of the property. This commission is usually a percentage of the final sale price and is paid by the property owner. The commission can be anywhere from 5% to 6% of the home sale price.

It includes a cancellation option for any breach of contract

There may be provisions in the agreement that allow for its termination under certain circumstances, such as if the agent fails to fulfill their obligations or if the property owner decides to withdraw the property from the local market. 

It includes the agent’s services and responsibilities

The agreement may outline the specific responsibilities and services that the agent or agency will provide, such as marketing the property, conducting showings, negotiating offers, and handling paperwork. They may even get you a good deal on home staging services. Since the agent has a vested interest in speeding up the sale, they generally have no problem committing to aspects such as promoting the property through various channels, including online listings, advertising, open houses, and networking within the real estate industry.

It could include exemptions 

Suppose, you know someone who wants to buy your house, say a family member or coworker, and you can avoid paying the real estate agent’s fee. You can mention that person’s name in the agreement as an exception. This means if they decide to buy your house, you won’t have to pay the agent, even if you have an exclusive listing agreement with them.

What are the drawbacks of giving an agent exclusive right to sell?

There are two major drawbacks to such an arrangement. First, the seller is expected to pay the agent commission even if they find a buyer themselves. 

Signing the agreement also means that unless you have included specific conditions of termination, you are stuck with your agent. Even when you aren’t happy with the way they market your home or the type of buyers they bring in. 

Key takeaway

Giving an agent or a company exclusive right to sell your property has pros and cons. If you sign an exclusive agreement with a real estate agent to sell your home, you usually have to pay them a commission even if you find a buyer on your own. 

The good thing about this agreement is that it makes the agent really focus on selling your home. They work harder because your home is their top priority. Your home selling process is streamlined, convenient, and easy to manage. The agent or the company handles the process for you – from start to finish. Just make sure you select a reputable listing agent. Once you do that, selling a house can be a seamless and profitable process for you.  

FAQs

What is the difference between exclusive right to sell vs. exclusive listing agency? 

The main difference between an exclusive agency agreement and an exclusive right-to-sell is when you pay the real estate agent. In an exclusive agency listing, you agree to pay only if the exclusive agent successfully sells the property. But with the exclusive right to sell, you have to pay the agent no matter what, whether the property is sold or not.

What should I remember before signing an exclusive agreement?

The first step is to consider the pros and cons of signing an exclusive agreement. Then comes verifying the credentials of the agent through testimonials, online reviews, and customer feedback. The last step is to hire a reputable agent by signing the contract. Make sure you understand the terms and conditions of the agreement before signing it. 

Can you back out of an exclusive right to sell agreement?

If you’ve been smart enough to include conditions of termination in your agreement you may be able to back out of the deal or not pay the agent’s commission. 

This is only in special situations. For instance, if there has been a breach of contract or the agent hasn’t held up their end of the obligations. In such cases, you may need the help of a real estate attorney and some hard proof of the breach.

What happens after the agreement’s expiry?

If the agreement expires, you could sign another agreement with the same agent or find a new agent. There is also a third option of pursuing for-sale-by-owner (FSBO) for those comfortable handling the process on their own.

Written by Ramona Sinha. November 24, 2023

Ramona is the Senior Content Writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. She has written articles covering a broad range of topics, such as real estate, lending and mortgage, finance, business, taxation, home designs, home improvement projects, decor concepts, and more. An avid traveler, she’s a digital nomad at heart and an animal lover from the depth of her soul.