What Are Exclusive Agency Listings In Real Estate?

Images: Getty Images; Illustration: Bankrate

In real estate, exclusivity can feel like a big plus. As a home seller, you want to work with the best possible agent and get as much specialized attention as you can. However, an exclusive agency listing is a little more complicated than that. If you’re considering this type of listing arrangement, it’s important to understand how it can benefit you — and how it might not.

What is an exclusive agency listing in real estate?

Exclusive agency is a type of real estate listing arrangement in which the seller agrees to let one agent and their brokerage (basically, the company they work for) be the only ones to market their home. The agent gets the unique rights to the listing, and if the home is bought by a buyer they bring forward, the seller pays them a previously agreed-upon commission.

That doesn’t necessarily mean you’ll be liable for commission costs, though. In an exclusive agency arrangement, “the seller still retains the right to find a buyer independently without paying a commission,” says Alisha Melvin, a Texas-based real estate attorney and broker.

“The commission is earned if the listing broker brings the buyer, or if another agent does. However, no commission is due if the seller finds the buyer without any agent’s help,” says Melvin.

So if, for example, you end up selling the house to an acquaintance or a relative, you may not need to pay commission under an exclusive agency listing agreement.

Exclusive agency vs. exclusive right to sell

Since exclusive agency can put an agent’s commission at risk, many real estate pros prefer exclusive right to sell agreements. This type of arrangement helps ensure they’ll get paid for the work they put in, no matter who the home ultimately sells to.

An exclusive right to sell agreement essentially guarantees that the real estate agent with whom you list will earn a commission if the home sale closes within the duration of your contract, whether they brought in the buyer or not.

While exceptions can still exist, paying the agent’s fee becomes the default scenario if you sign an exclusive right to sell contract — even if you end up selling to your best friend or your cousin — unless they’re specifically listed as an exemption in your contract.

What is an open listing?

An open listing is a third, non-exclusive type of real estate listing agreement. Unlike exclusive agency and exclusive right to sell agreements, an open listing doesn’t tie the seller to any particular agent. Instead, you could theoretically hire multiple agents to market your home, and the agent who brings the buyer is the one who will receive the commission. If you find the buyer yourself, you won’t have to pay any listing agent’s commission.

Pros and cons of exclusive agency listings

Signing an exclusive agency listing arrangement can come with some definitive perks, but there are drawbacks to consider, too. Here are the main advantages and disadvantages.

Pros

• You’ll get the benefits of working with a real estate agent who’s experienced and well-connected in your local market — which may help your home sell faster and for more money.
• At the same time, you have the option to sell commission-free if you find the buyer yourself from your own circle. “If a seller already has strong leads — like a friend, neighbor or business contact — it allows them to bring that person to the table without added commission obligations,” says Leah Robinson Christian, an associate broker at Engel & Völkers in Atlanta, Ga.
• You can try marketing and selling your own home while also getting help from a real estate pro. “This can also be helpful for FSBO-minded sellers who want the backup support of an agent with the ability to also try to find a buyer,” says Melvin.

Cons

• Since their commission isn’t guaranteed, an agent might dedicate less time or effort than they would to an exclusive right to sell listing. “Brokers are less motivated to market the property fully if there’s a chance they won’t be able to earn their commission,” says Melvin.
• For the same reasons, not all agents or brokerages will agree to exclusive agency arrangements, so you may have trouble finding an agent to represent you.
• If you and your agent are both working separately to sell your home, there could be missteps or miscommunications along the way. “If the seller is actively showing or negotiating on their own, it can lead to confusion, disclosure issues or even legal complications,” says Christian.

Bottom line

Before you settle on a listing arrangement, discuss the available options with your agent. Then, think carefully about the amount of work you want to put into the sale and how willing you are (or aren’t) to pay an agent’s commission. Also, no matter which type of agreement you choose, evaluate multiple agents to find someone who has experience working with sellers in your situation and has a good reputation among past clients.