1. What Is a Listing Agreement?
2. Differences Between Exclusive Right-to-Sell and Exclusive Agency Listings
3. Considerations With Listing Agreements
4. The Basics of an Exclusive Right-to-Sell Agreement

Knowing the difference between exclusive right to sell and exclusive agency is important when it comes to real estate. A realtor and their principal will have their business relationship defined by the presence of a written agreement. In some states, such as Kentucky, realtor agreements need to be put in writing to satisfy statutes against fraud. These agreements will layout the rights and responsibilities of both parties in the contract.

What Is a Listing Agreement?

When an agreement between a seller and a realtor is made, it is often known as a listing agreement. There are three types of listing agreements that can be entered into. These include:

  • Open Listing.
  • Exclusive Agency Listing.
  • Exclusive Right-to-Sell Listing.

The most commonly used listing agreement is an exclusive right-to-sell.

With an open listing, the owner chooses to sell their home themselves. There is no exclusive contract, and the owner may have one or more open listings with multiple real estate brokers. With this arrangement, the owner will only pay the selling broker's commission which is about half of the typical fees. This is due to the fact that the owner is not represented. If they sell the house to a buyer without an agent, they will pay no fees.

Differences Between Exclusive Right-to-Sell and Exclusive Agency Listings

The primary difference between an exclusive right-to-sell and exclusive agency listing is whether or not a commission will be due. In an exclusive right-to-sell agreement, the seller will be responsible for paying the realtor fees even if they find the buyer completely on their own. With an exclusive agency listing, the seller will only pay fees in the event the realtor finds the final buyer.

The two different types of listings are not titles of agreements but part of the body for the contract so you will need to read through your entire contract to find out which listing agreement is in there.

Considerations With Listing Agreements

Before signing any type of listing agreement, it is always wise to make sure you understand the framework of the agreement before you sign. The choice you will have to make will largely have to do with the amount of effort that you can put into the actual selling of your home yourself as well as how hot the real estate market is. Other things you will want to consider before signing a listing agreement include:

  • The length of the listing - This section is normally negotiable and can be anywhere from 30 days to a year or more.
  • Cancellation rights - Make sure that you understand what your cancellation rights are.
  • Selling commission - You should know what the percentage you are expected to pay when the sale is made and should make sure that it falls in line with the current state of the real estate market.
  • The contract expiration - Your agreement should include a clause stating that if the contract should expire without a mutual renewal or sale, that the broker may supply you with the names of any prospective buyers that have been produced. It is important to note that if the owner approaches those buyers and they buy within a certain time period, the owner may still be required to pay the commission.

The Basics of an Exclusive Right-to-Sell Agreement

With an exclusive right-to-sell agreement, your broker will have the exclusive right to earn commission and be able to represent the owner in selling the how. They will bring in buyers directly or through another brokerage. When an owner signs an exclusive right-to-sell agreement, they are also agreeing to compensate the agent who lists the home and finds the buyer. This commission will be due to no matter who procured the actual buyer.

After the sale, the owner will pay both a listing and selling brokerage fee. Even if the owner sells the house themselves, they cannot avoid paying the fee unless there is a specific exception noted in the contract.

An exemption is when an individual is named on the listing agreement, and the house is sold to that person. In that case, the owner will not have to pay the commission to the listing broker. For example, there could be an exemption stating that if the granddaughter ends up buying the home, there will be no commission obligation.

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