Houses for Sale

What Is An Exclusive Agency Listing?

If you are ready to sell your home, you may be looking for the assistance of an experienced realtor to help make the process a cinch. If so, it’s also important to understand some of the finer workings of selling real estate through an agency.

One of the most common questions people selling their home ask is: “What is an exclusive agency listing?” In this article, we’ll take a look at the pros and cons of exclusive agency listings, as well as a similar offering, an exclusive right to sell.

What is an Exclusive Agency Listing

An exclusive agency listing is an agreement defined by a real estate agent to have the exclusive right to represent the home seller. In exchange for this exclusivity, the agent only receives a commission if they bring in a valid buyer. If the agent cannot bring in a buyer, the seller is not required to pay the commission.

It should be stated that this isn’t a common practice for real estate agents, as it puts a large amount of responsibility on the agent to make a sale with few guarantees.

Pros of an Exclusive Agency Listing

  • Cost-savings for sellers: Having the ability to not pay a commission if an agent doesn’t find a seller reduces the loss of profit to the homeowner. This can be useful for those who already have a network of potential buyers, but want a low-risk opportunity to expand their pool of buyers.
  • More control during the selling process: An exclusive agency listing enables homeowners to to bring in buyers that they may already be familiar with and trust. In turn, this addresses privacy concerns and who gets to see the property.

Cons of an Exclusive Agency Listing

  • Less incentives for agents: Agents earn their income from commissions, so they may be less incentivized to put their full effort into selling your home if they have no guarantees of payment. This includes everything from their willingness to create compelling advertisements, thorough listings, and well-attended open houses.
  • More work to sell the home: Homeowners who enter an exclusivity agency listing often have to do a large portion of the work in selling the home - even having to front the cost of putting the home on an MLS (Multiple Listing Service). This can be time-consuming and stressful for homeowners that may be in the process of securing their next home, have dependents to care for, or work full-time.

What Is an Exclusive Right to Sell?

Now that you have an understanding of what an exclusive agency listing is, there is a similar term you may recognize from dealing with realtors: exclusive right to sell.

An exclusive right to sell is an agreement means that a real estate agent has exclusive right to sell a property, but also earn a commission from the sale of the home. This also means that whether the agent provides a buyer or not, they still earn a commission.

At first look, this may seem like an unfair arrangement, but it still guarantees the agent an income - especially if they have taken the time to market the home, interact with buyers, and help close the house. However, this is standard practice and the most common agreement between a seller and real estate agent.

It should be also said that an exclusive right to sell is limited to a predetermined period. If the agent cannot produce a qualified buyer, the seller and the agent can terminate the contract or renegotiate new terms.

Pros of an Exclusive Right to Sell

  • Better agent motivation: Because the agent is earning a guaranteed commission, they are more motivated to sell your home for the highest price and to the largest volume of potential buyers.
  • Easy access to MLS: Most private homeowners are excluded from a MLS unless they pay a substantial upfront fee (and subscriptions services). By contrast, real estate agents take care of this cost to put your home on multiple listing websites and publications. Cons of an Exclusive Right to Sell
  • Guaranteed commission policy: Under an exclusive right to sell, even if the agent doesn’t provide a qualified buyer, homeowners are still required to pay their commission costs of the home sale. This can be off-putting to many homeowners, especially if they find a buyer on their own. That being said, unless a homeowner feels that they can do everything an agent can do, it may be wishful thinking to feel that an agent doesn’t deserve their commission.
  • Cancellation policy: As stated before, an exclusive right to sell contract doesn’t last forever. Sellers should thoroughly read their listing agreement to find out the contract’s fine print regarding when the agreement expires. This can be frustrating for those that feel that their agent isn’t doing a good job. And while it may not be the most ethical course of action, a buyer and seller may wait until this period elapses to save on commission costs, especially if the buyer doesn’t have an agent working on their own (legality differs by state).