Exclusive Agency Listing Agreement: Everything You NEED to Know

If you are a property owner considering selling your house, an Exclusive Agency Listing Agreement could be the right choice for you. Listing Agreements are legally binding contracts between you and the agent. Before signing, you must be aware of such Listing Agreements.

With such an agreement, you can rest assured that your property will be marketed effectively and efficiently by a professional real estate agent.

In this blog, we will learn all about an Exclusive Agency Listing Agreement in detail, including its importance and what questions to ask before signing.

What is an Exclusive Agency Listing?

An Exclusive Agency agreement grants the real estate agent the absolute right to sell your property. It means that you cannot use another agent or brokerage to list your home until the end of the contract.

The real estate agent gets their commission only if they find the buyer during the contract period. If you find a buyer on your own, you do not have to pay the agent’s commission. 

It is also important to consider the “procuring cause” in such a contract. This cause lets the agent claim that their actions contributed to the buyer successfully purchasing the property. Hence, the agent can demand a commission.

Exclusive Agency vs. Exclusive Right to Sell

The “Exclusive Agency” and “Exclusive Right to Sell” are often confused with each other. However, they are two different types of real estate Listing Agreements.

• Exclusive Agency: In an Exclusive Agency Agreement, the agent is entitled to a commission only when they bring in the buyer. If you find a buyer on your own, you don’t have to pay the commission.
• Exclusive Right to Sell: An Exclusive Right to Sell contract provides the agent with the complete right to sell the property on your behalf. You have to pay the agent commission regardless of who brings in the buyer.

Pros and Cons of Exclusive Agency Listing Agreement

As a seller, you must carefully weigh the pros and cons before entering into a Listing Agreement.

👍 Pros

An Exclusive Agency contract does have certain advantages that work in your favor. They are:

• Expert Assistance From the Agent: You will have the support and expertise of a dedicated agent. The agent will work to sell your property and negotiate the best possible terms on your behalf.
• You Won’t be Hassled by Other Agents Trying to Get Your Listing: You grant the responsibility of the home sale to the agent. Hence, no other agents will pester you directly.
• You can Save on the Agent Commission: If you can bring a buyer to the table, then you don’t have to pay any commission to the agent. However, the agent is obliged to help you throughout the entire home-selling process.

👎 Cons 

However, an Exclusive Agency Listing Agreement has certain drawbacks. They include:

• Limited Exposure to Your Property: The Exclusive Agency agreement limits your right to market the property yourself. Moreover, you cannot work with other agents. This can result in less exposure and fewer potential buyers for your property.
• No Guarantee of Sale: The agreement does not guarantee the sale of your home. Working with one specific agent also limits your property’s exposure to potential buyers (if not listed on the MLS).
• Long-term Commitment: The agreement binds you to the agent for a certain period (typically 6 months). You cannot sell the property to a buyer without the agent’s involvement for that duration.

5 Questions to Ask Before Signing an Exclusive Agency Contract

Before signing an Exclusive Agency Listing Agreement, it is important to ask the right questions. So here are five questions to ask before signing any such contract:

1. How do Exclusive Agency Listing Agreements Work?

Here are some key factors to understand about how Exclusive Agency Listing Agreements work:

• Exclusivity: The Exclusive Agency Agreements grant the listing agent the sole right to market and sell the property. It means you cannot work with any other real estate brokerage to sell your home.
• Contract Term: Exclusive Agency Agreements have a specific contract term. It typically ranges from 60 to 180 days. The agreement may automatically expire if the property does not sell during the contract term.
• Details of Property: The agreement should include detailed information about the property being listed. It must include its address, legal description, and any unique features or amenities. The agreement should also outline the listing price.

2. How common is an Exclusive Agency Listing?

Exclusive Agency Listing Agreements are less common than Exclusive Right-to-Sell Agreements or Open Listing Agreements.

The prevalence of such agreements may vary by location and by the local real estate market conditions. Ultimately, the Listing Agreement will depend on the need of the property owner.

3. What is the Commission Rate and Structure?

The agreement consists of the agreed-upon real estate agent commission fee. The average real estate commission is 5% to 6% of the total home sale price. You must ask your real estate agent about their commission rate and structure. Make sure it is mentioned in the contract clearly.

Some agreements also include additional fees for marketing and other administrative charges. The commission rates also differ depending on factors such as regional housing market trends, the type of property, and services provided.

4. Does an Exclusive Agency Makes Sense for FSBO Sellers?

If you want to sell your house FSBO, signing an Exclusive Agency contract does make sense in certain circumstances. These may include selling FSBO for the first time, limited time and resources for marketing, or assistance in legal paperwork.

As a FSBO seller, signing an exclusive contract might help get you an experienced agent at your disposal. The agent’s expertise can help you with marketing and paperwork for the property.

However, you might have opted for FSBO to save on the listing agent’s commission. So signing an Exclusive Agency contract might be a little heavy on your pocket.

5. Should You Sign an Exclusive Agency Listing Agreement?

Before signing an Exclusive Agency Agreement, you must consult with your agent about all the available options. You should select an alternative that best serves your interest.

Signing an Exclusive Agency contract can be a good backup option if you are a first-time FSBO seller. Once you sign the contract, you are in a race with your agent to find a buyer. If you find a buyer on your own, you save up on the agent’s commission.

You must carefully evaluate the advantages and drawbacks before signing an exclusive contract. You can also ask for a trial run from your agent if the brokerage allows it.

What’s in it for the Agent?

In an Exclusive Agency contract, the agent has the absolute right to market and sell the property. However, you also retain the right to sell the property along with the agent.

The agent is entitled to a commission, given the buyer that buys that property was brought in by them. The agent can claim their fees by triggering the ‘procuring clause’.

Alternatives to Exclusive Agency Listing

There are a few alternatives to the Exclusive Agency Listing Agreement:

1. Open Listing

In an Open Listing, you can hire multiple agents to sell your house. You only have to pay the agent who sells your property a commission.

Unlike an Exclusive Right to Sell listing, you don’t have to pay the commission if you bring in the buyer. But as you hire multiple agents, no one agent is fully responsible for marketing the property.

2. Net Listing

In a Net Listing, you can set a minimum sale price for your property. Any amount exceeding this price limit goes to the agent as a commission.

Net Listings are very uncommon as they can lead to conflicts of interest between you and the agent. Hence they are just legal in 3 states: Florida, Texas, and California.

3. Multiple Listing

Multiple Listing features your property on the Multiple Listing Service (MLS) platforms. By listing a property on MLS, agents can increase its visibility. This increases the possibility of you landing the right buyer at the right price.

But don’t you need to hire an agent and pay a 6% commission to get on the MLS?

Not with Houzeo! With Houzeo, you skip paying the listing agent commission. Instead, you pay a one-time, small flat fee to list your house on the MLS.

Check out how Houzeo works in this video:

» Houzeo Reviews: See how Houzeo home sellers save thousands with Houzeo technology and MLS exposure.

Bottomline

Exclusive Agency contract does come with the perk of having a real estate agent assist you in the home-selling process. It also grants the listing agent the exclusive right to market and sell the house. This means you cannot work with another agent or broker till the contract term lasts.

You do not have to pay the commission if you bring a buyer yourself. Hence, an agent might not be motivated enough as there is no commission guaranteed.

Make sure you go through the fine print carefully before you sign the agreement. You can always discuss the terms and conditions with your agent.

Frequently Asked Questions

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Exclusive Agency Listing Listing Agreement