Exclusive Right vs. Exclusive Agency
Exclusive right vs. exclusive agency refers to two types of listing agreements between real estate owners and the agent who is helping to sell the real estate.3 min read
2. Exclusive Agency
3. Open Listing
4. Probate Listing
5. Differences Between the Listing Agreements
Exclusive right vs. exclusive agency refers to two different types of listing agreements between real estate owners and the agent, listing broker, or another representative who is helping to sell the real estate. The main difference is the conditions under which the seller is required to pay a commission to the representative when the property sells.
The most widely used types of listing agreements that are used by sellers of real estate are:
- Exclusive Right to Sell
- Exclusive Agency
- Open Listing
- Probate Listing
Exclusive Right to Sell
When a real estate seller signs an exclusive right-to-sell agreement, the broker, agent, or another representative of the seller is entitled to receive a commission from the sale even if that person does not actually procure the buyer. If the buyer comes from the efforts of the seller or someone else instead of the agent, the seller must still pay the commission.
In this type of contract, the seller is allowed to name certain people or entities as exemptions, so that if that person or entity purchases the property, the listing agent is not entitled to a commission. This is the most common arrangement with a full-service real estate agency.
Exclusive agency listing agreements are most often used with flat-fee listing brokers who provide limited service to their clients. In this type of agreement, the listing broker serves as the real estate seller's agent or representative. However, they are only paid a commission if the property sells through their efforts. If the seller is acquired in another way, such as by the marketing efforts of the seller, the agent is not due a commission.
Another type of listing agreement is “open listing.” In an open-listing agreement, more than one agent may be working for the seller. Only the agent or broker who brings the buyer to the seller, and helps to complete the sale, gets the commission.
If the owner of the real estate property has died, the estate may be represented by an agent or broker with a probate listing. These are typically full-service agents because they are most likely to negotiate the best price for the property with no effort required by the heirs or other involved parties.
Differences Between the Listing Agreements
If you are selling real estate, you must pay attention to the language of the written agreement you are signing with an agent. Only a few words, which may be buried in the agreement, can make a vital difference in how the agreement works.
Other than the small bit of text that defines the type of agreement, and how the agent is entitled to compensation, all listing agreements are similar. If the agreement is an Exclusive Right to Sell, it states that the seller will pay the agent a certain amount of money if that agent is able to produce a buyer for the real estate. However, in an Exclusive Agency listing, the agreement states that the seller must pay the agent a certain amount of money regardless of the source of the buyer.
The Exclusive Right-to-Sell agreement means that it doesn't matter who found the buyer for the real state; even if it was another agent, or if the seller managed to find a buyer for the property themselves, the broker must still be paid. Even if, for example, a friend or family member of the seller decides to buy the property — or the seller mentioned on social media that the house was for sale — the agent must be paid, even if they had nothing to do with the ultimate buyer of the property.
In an Exclusive agency agreement, it's possible that the agency that lists and markets the property might not receive any commission when the property is sold. If the seller manages to find the buyer themselves, as long as the agent was not involved in the sale, they are not required to be paid a commission. Use caution when signing a listing agreement, especially when there is a possibility that you may find a buyer yourself or would like to use the services of more than one agent or representative.
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