When your home has served its purpose and it’s time to upgrade, you’ll quickly realize that not every real estate broker agreement is the same. An exclusive right to sell listing is a popular type of contract that has to do with the relationship between the seller and the real estate agent. It is a clause within the contract that gives the broker the exclusive rights to market and sell the property. In exchange, the agent is entitled to the agreed-upon commission, regardless of which party brings in the sale.
Once the seller signs on the dotted line and as long as the contract is in place, another agent cannot muscle their way into becoming the listing agent. Any potential buyers interested in seeing the property must do so through the listing agent or broker.
Let’s say a friend of a friend heard that your beautiful townhouse is on the market. Regardless of the friendship, the interested buyer must go through the listing agent when an exclusive right to sell is involved. This means that the seller has to pay the agent or broker a commission once the home is sold, no matter the players involved in the sale. The typical commission is 6% and is shared equally between the buyer and seller agents.
How Long Does an Exclusive Right to Sell Agreement Last?
Before you lock yourself into a right to sell agreement, you first need to know what you are getting yourself into. Most importantly, you need to know that you will be bound by the terms of the agreement for the duration of the contract. And if you are wondering how long the agreement will last, the answer is that it depends. Be sure to know the terms from the get-go in case you need to cancel the exclusive right to sell agreement.
In the U.S., the average duration of a listing agreement is six months, but it could be as short as three. Other factors could also influence the terms, such as the state of the local real estate market, rules at the real estate broker, or even your own standards that you negotiate.
Even though signing an exclusive right to sell might seem like you are signing your life away, that’s not the case. An exclusive right to sell is a two-way street meant to guard both sides — the seller and the real estate broker. The selling agent is incentivized to provide you with the best service, while you are set to pay them for doing just that.
If a cancellation of the exclusive right to sell agreement occurs, the seller should be able to end the deal at a moment’s notice. However, this will depend on the rules in your region.
There are several legitimate reasons for canceling an exclusive right to sell agreement, such as the situation veering off course. Other more personal reasons could be:
- A family-related urgent situation
- The seller has a change of heart and wants to rent out the property instead
- Job-related requirements
The other option is to let the exclusive right to sell agreement run its course and expire. When that happens, both you and the agent will be released from your obligations. There is one caveat, though. If a cancellation of the exclusive right to sell agreement doesn’t take place, but your home sells shortly after the selling agreement expires, the realtor might still be entitled to a commission. This asterisk will depend on the fine print in the contract. Its purpose is to make sure the agent is paid when the house is sold, even if the sale falls slightly outside the bounds of the agreement.
Should You Enter an Exclusive Right to Sell Agreement?
Before deciding if you should enter into an exclusive right to sell agreement, it helps to consider an alternative. For example, an open listing is one in which the exclusivity factor doesn’t exist. The seller can engage more than one agent to list, show, and market their property. Without any specific fee arrangements, the seller’s allegiance and the commission go to the broker who secures the sale. Nonetheless, the exclusive right to sell agreement is still the more common type of listing.
Keep these things in mind when you start considering entering into an exclusive right to sell agreement.
- Time is of the essence. Hiring an exclusive agent could work to your benefit because they are motivated to get your home in front of buyers and earn a commission.
- Selling your house can be a stressful experience. Juggling multiple listing agents at the same time is often confusing and complicated. In this case, having an exclusive right to sell agreement could make your life easier.
- A penny saved may be a penny earned, but when you’re selling your home, it will also mean more work. The more you let your exclusive agent do, the fewer hoops you will have to jump through to sell your property.
- Considering that a home is one of the largest investments you’ll ever make, you might want to avoid the DIY trend and hire a professional, instead. After all, they are the ones with the networking contacts and expertise in this field, and having an exclusive agent tends to work in the seller’s favor.
- If you are interested in protecting your privacy, then you won’t want too many cooks in the kitchen, so to speak. Having an exclusive right to sell agreement in place limits who has access to your private information, including potential buyers who even qualify to make an offer.
Explore Ratecloud’s Mortgage Options
Now that you know your listing options, are you ready to explore mortgage possibilities? Ratecloud’s automated approach to mortgage processing saves you money and can help you get into your new home much sooner. Get started on your digital mortgage application today!
