Exclusive Right to Sell Listing Agreement: Read BEFORE Signing

If you’re looking to sell your house, you’re likely considering hiring a real estate agent. An experienced agent will bring expertise, give you the ability to list on MLS, and even help you negotiate offers and navigate closing.

But they will make you sign a Listing Agreement before working with you. Listing Agreements are complex, legally enforceable contracts between you and the agent. So you need to know everything about them before you sign a Listing Agreement.

In this blog, we’ll explore the Exclusive Right to Sell Listing Agreement in detail, including its benefits and drawbacks.

What Does Exclusive Right to Sell Mean?

Exclusive Right to Sell is a type of listing agreement that gives the real estate agent the sole right to market and sell your property. It is a mutual agreement between you (the homeowner) and the real estate agent.

You cannot hire another agent or broker as long as the contract is valid. The contract compels you to pay the broker an agreed-upon real estate commission, regardless of who brings the buyer to the table.

You should not, however, mix up an Exclusive Agency listing with an Exclusive Right to Sell listing agreement.

Exclusive Right to Sell vs. Exclusive Agency

The “Exclusive Right to Sell” and “Exclusive Agency” are two different types of real estate listing agreements:

• Exclusive Right to Sell: Exclusive Right to Sell agreement 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.
• Exclusive Agency: In an Exclusive Agency Listing 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.

Important Factors to Consider Before Signing an Exclusive Right to Sell Agreement

Here are a few factors you must review before signing an exclusive right contract:

1. Duration of the Agreement

The agreement typically lasts between 30 days to 6 months. However, you can set the contract duration according to your need by discussing it with your agent.

The duration of the contract is a vital factor. Too short, and it can affect the agent’s ability to market and sell the property in a restricted time frame.

Too lengthy, and you might feel stuck with your agent. You will also have to pay the agent their commission, even if the sale gets delayed.

2. Commission

The agreement consists of the agreed-upon real estate agent commission fee. The average real estate commission is 5% to 6%, evenly split between the listing and buyer agents.

You could end up paying more at the closing of the property if the commission rate is not specified. So make sure the commission rate is specified in the contract.

3. Cancelation of Contract

An Exclusive Right to Sell agreement must include a termination clause in case you want to end the contract.

There are various potential causes for this. For instance:

• The agent you chose is not good.
• You decide against the sale and wait for the real estate market conditions to get better.
• You and the listing agent have a clash of interests and it wasn’t in your favor.

4. Exemptions

Even if you want to sell your home to a prospective buyer, you should still hire a real estate broker or an agent. You can include this buyer under an exemption.

This way, you won’t have to give the agent anything if the same buyer purchases your property. The contract helps you out if the deal doesn’t go through.

Pros and Cons of Exclusive Right to Sell Agreement

As a seller, you must carefully weigh the pros and cons before entering into any such agreement.

👍 Pros

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

• The Agent will be Committed to the Sale: Since a sale will ensure that they receive their commission, the agent is more likely to invest more time and money in marketing the property. This might result in greater visibility and a higher possibility of your home selling for top dollar.
• You Won’t be Hassled by Other Agents Trying to Get Your Listing: You grant the responsibility of the property sale to the agent. Hence, no other agents will pester you directly.
• Your Agent will do the Heavy Lifting: You receive personal assistance from the agent. The agent will schedule showings, present you with offers on your property, and also negotiate offers.

👎 Cons 

However, an Exclusive Right contract has certain drawbacks. They include:

• No Skipping the Agent Commission: Once you enter the agreement, you have to shell out the agent’s commission. There is no turning back. This can significantly cut down your profits.
• Long-term Commitment: The agreement binds you to the agent for a certain period (typically 6 months). It means that you cannot sell the property to a buyer without the agent’s involvement for that duration.
• No Guarantee of Sale: The agreement does not guarantee the sale of the property. Working with one specific Realtor or an agent also limits your property’s exposure (if not listed on the MLS) to potential buyers.

Alternatives to Exclusive Right to Sell Listing Contract

There are a few alternatives to the Exclusive Right to Sell 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. Like an Exclusive Agency 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

Entering an Exclusive Right to Sell agreement can ultimately help you simplify the home sale process. The agent becomes the sole person responsible for the sale in exchange for a commission.

The contract provides a strong incentive for the agent to invest time and money in marketing the property. They are guaranteed to receive a commission if the property is sold during the term of the agreement.

However, exclusive contracts do not always guarantee that your house will be sold. You might also feel tied to an agent for a long period of time. So it is always better to consult with your agent before entering an exclusive agreement.

Frequently Asked Questions

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