What Does Exclusive Right To Sell Mean?

When it’s time to sell your home, there is a number of considerations to make. In most cases, you’ll want to consult a professional to make sure you’re getting the most out of the sale. Sellers usually work with agents to facilitate the transaction, but there are numerous types of contracts you can sign with a real estate agent.

An exclusive right to sell is one of the agreements you can sign with your agent. While it’s more binding than other types of contracts, it can provide extra benefits for the seller and the agent that drives the home sale forward. Let’s explore the meaning of an exclusive right to sell and look at your other options for selling your home.

What Is An Exclusive Right To Sell? 

An exclusive right to sell listing agreement is a contract between a listing agent and a home or property owner. An exclusive right to sell specifies that the listing agent is the only agent you’ve hired, and the agent is guaranteed to receive the commission when your house sells.

The National Association of REALTORS^® advises that once you sign an exclusive right to sell agreement, the listing agent is entitled to compensation when the home sells – whether or not the agent finds the home buyer. That said, an exclusive right to sell agreement motivates the real estate agent to work diligently to find a buyer.

Typically, the listing agent will start by listing your property on the multiple listing service (MLS). Once the property is on the MLS, it will be in front of as many potential buyers as possible. This critical step is why many buyers sign an exclusive right to sell agreement after finding the right real estate agent.

How Do Exclusive Right To Sell Listing Agreements Work?

 

Obtaining an exclusive right to sell agreement starts by finding the right real estate agent or broker. After speaking with the agent you’d like to work with, here’s what will happen if the brokerage or agent requires an exclusive right to sell agreement.

Sign The Agreement

First, review the exclusive right to sell agreement. Don’t be afraid to ask any questions about the compensation arrangement or the duration of the contract, especially since you’ll be required to pay the agent’s commission until the deal expires. If you aren’t satisfied with any portion of the agreement, request changes you’d like to see – everything is negotiable.

List Your Home

After you and your agent sign the agreement, the agent typically puts the property on the MLS to list it for sale. From there, hopefully, the offers pour in. In the best case, a buyer will come forward with an offer at or above your asking price, and closing will go smoothly.

 

If a buyer doesn’t materialize by the end of the agreement, you can try again with your agent or part ways with them and use another agent. You may also decide to list the home for sale by owner (FSBO) or hold off on selling your home.

Exclusive Right To Sell Vs. Exclusive Agency

Unlike an exclusive right to sell agreement, an exclusive agency agreement requires the seller to pay their agent only if the agent finds the buyer. Because of the freedom associated with an exclusive agency agreement, sellers can find a buyer to avoid paying the agent’s commission.

Since the agent is only entitled to a commission if they find the buyer, there’s more at stake for the agent. If the seller finds the buyer, they can save big on commission fees.

An exclusive agent listing represents more financial risk for the agent because they may potentially lose their commission. As a result, many agents won’t accept an exclusive agency agreement.

Are There Other Types Of Listing Agreements?

An exclusive right to sell agreement isn’t the only option out there. Here’s a closer look at a few other options:

Open Listing

Open listings allow multiple real estate brokers to find potential home buyers, and the seller can also look for buyers. As a result, an open listing can create broad exposure to buyers.

Generally, open listings won’t be on the MLS. Instead, contact with multiple brokers could lead buyers to the property. This arrangement grants sellers flexibility, but finding agents to accept this deal can be challenging.

Multiple Listing

When your real estate agent lists your property on the MLS, it opens the door to many buyers. Almost every real estate agent uses the MLS to find properties for their buyers. Real estate listed on the MLS puts the most eyeballs on it.

You’ll find that most exclusive right to sell and exclusive agency listings are on the MLS, but you can pay a fee to place your property on the MLS yourself. If you decide to sell your home on your own, you can list your home on the MLS.

Net Listing

A net listing is an option that allows a real estate agent to pocket the difference between what the homeowner wants the house to sell for and the final sale price.

This listing incurs more risk for the real estate agent. If they sell the home for less than the baseline number, they walk away with no commission. On the flip side, they could score big with the right buyer.

The seller could miss out here, too. If they don’t know the market value of their home and ask for too little, they could end up walking away with less money than they would have with another type of listing agreement.

Because of the downsides, it’s not surprising that this listing option is unpopular. In fact, it’s illegal in several states because it’s complicated and disadvantages agents and sellers.

Should You Sign An Exclusivity Agreement?

Exclusivity agreements are helpful for sellers who aren’t familiar with the real estate process – but they may not be right for you.

Because an exclusive right to sell agreement guarantees your agent’s commission when your home sells, your agent will work hard and keep your best interests in mind. The advantage of hiring a dedicated agent is that it may help you find a buyer quickly.

If you’re a seller who spends hours searching for buyers – an exclusive right to sell agreement may not be for you.

An exclusivity agreement entitles the agent to receive a commission even if they don’t secure the buyer. Paying the commission could reduce your profits by thousands of dollars – thousands you may have saved if you listed your home for sale by owner.

If you’d like to hire a real estate agent, but want to keep the option open to sell the property yourself, an exclusive agency agreement, or other less restrictive agreement, may be a better choice.

Exclusive Right To Sell FAQs

Like any legal document, an exclusive right to sell agreement can raise many questions. Let’s look at some common concerns:

How long do exclusive right to sell agreements last?

The duration of an exclusive right to sell agreement will vary based on your circumstances. The agreements commonly last 30, 60 or 90 days. However, in some cases, the deal may stay in place for up to 12 months. Make sure to verify the length of an agreement before you sign a contract.

How do I get out of an exclusive right to sell agreement?

Sellers who need to get out of their exclusivity agreement have several options. They can wait for the listing agreement to end or cancel according to the terms of the agreement. If the relationship isn’t working with the agent, reach out to see if you can end the agreement early and amicably

What happens after an exclusive right to sell agreement expires?

If the seller’s home doesn’t sell by the time the contract ends, the seller can choose from several next steps. For example, sellers can employ the same agent for a second go at selling the home, try to sell it on their own, find a different agent or wait to sell it.

The Bottom Line: Exclusive Right To Sell Agreements Can Attract Home Buyers

An exclusive right to sell agreement can ensure that your real estate agent devotes their full attention to your home sale. The agreement is advantageous because it aligns the agent’s goal with yours.

It’s not unusual for a broker to ask for an exclusive right to sell agreement. If they do, consider the pros and cons before signing. Sellers typically sell their homes to get the highest price in the shortest amount of time. Therefore, it’s wise to consider your listing options before moving forward.