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What is an Exclusive Agency Agreement?
An Exclusive Agency Agreement is a legal contract between a real estate firm and home seller that grants the firm the right to be the only entity to market and sell a property. In other words, this agreement gives the real estate agent the right to be the only agent to sell the property.
This is different from the exclusive right of sale agreement in which the seller cannot retain the right to market and sell the house without paying a commission. For exclusive agency agreements, the seller still retains the right to market and sell the home without paying a commission to the listing firm or agent, if the seller finds the buyer independently.
Anyone who hires a real estate agent signs an agreement. In case of sellers, it is the exclusive agency listing. In case of buyers, it can be the buyer’s exclusive agency agreement.
Difference Between Exclusive Right and Exclusive Agency
In an exclusive right agreement, the listing agent will receive commission from the seller regardless. After signing this agreement, the seller of the house will also have to pay a commission to the broker if they find a buyer and sell the house.
In an exclusive agency agreement, the seller retains this right. The biggest difference between the exclusive right and exclusive agency is commission. An exclusive agency will not guarantee commission but an exclusive right will.
Here is an article about different types of listing agreements.
How Exclusive Agency Agreements Work
There are key elements in any exclusive agency agreements. Here are some common ones used by firms and agents:
- Exclusive right to sell : If the agreement is between a seller and a broker, it could include the exclusive right to sell, thereby giving the chosen firm or agent the sole right to sell the property.
- Buyer-broker exclusivity : Buyer-broker exclusivity in an exclusive agency agreement means that a buyer will only work with the firm or agent the buyer chose. The buyer cannot change or look for other firms and agents to work with.
- Term of contract : The term of the contract is the first part of an exclusive agency agreement where length of the contract is outlined. Term could be weeks, months and even years and can be negotiable if you feel that the term is too long or too short. It essentially sets the length of time the real estate firm will have exclusive rights to sell the property.
- Compensation: This lists the amount of compensation the agent will earn if the sale happens. Commission is generally 5-6% of the sale price but is negotiable. The document should clarify that if the seller pays the compensation out of the proceeds of the sale then the buyer is not obligated to pay anything extra.
- Property description in the contract : The agreement should define the property in question. You are only bound to the contract if this description matches the actual property in case you are the buyer. This would also include the type of listing.
- Listing Price : In case of an exclusive agency listing, the document should mention the listing price.
Should You Sign an Exclusive Agency Agreement?
Before deciding if an exclusive agency listing is right for you, you should consider the advantages and disadvantages of the agreement.
Advantages of Exclusive Agency Listings
- Save Money : This type of listing can help you save money. If you find a buyer independently for your home and sell the property, you will not pay any commission to the real estate firm or agent.
- Better Relationships with your Agent : Since an exclusive agency agreement gives the agent the right to exclusively market your property, greater trust is established between you and your agent, which can create a better working relationship.
Disadvantages of Exclusive Agency Listings
- Agent Motivation : If commission is not guaranteed, an agent might not be motivated to market and sell the property as much as if it were. You may also create a sense of security for the listing agent, as opposed to hiring multiple that may work harder to create a sale.
- More work for seller : Since the agent might not be motivated, there would be more work for you, or the seller, to market and sell your home.
You can compare the pros and cons of an exclusive right agreement before deciding which would be the best fit for you. Here are some pros and cons of an exclusive right agreement:
Advantages of Exclusive Right Listings
- Motivated Agent: Since the contract has a fixed term and the agent will earn a commission under an exclusive right to sell agreement, they are more likely to be motivated to find and sell the property.
- Multiple Listing Service: In order to sell the property quickly, the agent is more likely to use multiple listing services to provide exposure.
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Disadvantages of Exclusive Right Listings
- Cancellation policy of the contract: Some contracts do not allow cancellation mid-term. Read through the agreement before signing.
- Pay Commissions Regardless: You may be able to find your own homebuyer but still be required to pay the agent commissions for the sale.
Want to know if an exclusive right listing is a better fit for you? Here is an article comparing the pros and cons of exclusive right listings.
Before signing an exclusive agency, agreement make sure to read thoroughly and ask questions. Do the following before signing an exclusive agency agreement:
- Inquire about a shorter term : If your contract seems too long, you can negotiate the term of the contract.
- Ask for a trial run: Before handing off your house to an agency, you might want to go for a trial run to ensure they are fit to sell your house. You can also ask your firm or agent for a trial run before signing an exclusive agency agreement to ensure you can work well with your firm or agent.
- Read the fine print : You will want to ensure that all clauses are agreed upon in the agreement. If there are provisions and conditions to any services being offered by the firm, be sure to read through them before signing the contract.
You can find templates online to draw up your own exclusive agency agreement. However, it is advised to consult a real estate professional to ensure a smooth deal.
Get Help with a Buying Agency Agreement
Do you have any questions about buying agency agreement and want to speak to an expert? Post a project today on ContractsCounsel and receive bids from real estate lawyers who specialize in real estate law.
Meet some of our Exclusive Agency Agreement Lawyers
Seasoned technology lawyer with 22+ years of experience working with the hottest start-ups through IPO and Fortune 50. My focus is primarily technology transactions with an emphasis on SaaS and Privacy, but I also provide GC services for more active clients.
I am a California-barred attorney specializing in business contracting needs. My areas of expertise include contract law, corporate formation, employment law, including independent contractor compliance, regulatory compliance and licensing, and general corporate law. I truly enjoy getting to know my clients, whether they are big businesses, small start-ups looking to launch, or individuals needing legal guidance. Some of my recent projects include: -drafting business purchase and sale agreements -drafting independent contractor agreements -creating influencer agreements -creating compliance policies and procedures for businesses in highly regulated industries -drafting service contracts -advising on CA legality of hiring gig workers including effects of Prop 22 and AB5 -forming LLCs -drafting terms of service and privacy policies -reviewing employment contracts I received my JD from UCLA School of Law and have been practicing for over five years in this area. I’m an avid reader and writer and believe those skills have served me well in my practice. I also complete continuing education courses regularly to ensure I am up-to-date on best practices for my clients. I pride myself on providing useful and accurate legal advice without complex and confusing jargon. I look forward to learning about your specific needs and helping you to accomplish your goals. Please reach out to learn more about my process and see if we are a good fit!
I am a NY licensed attorney experienced in business contracts, agreements, waivers and more, corporate law, and trademark registration. My office is a sole member Law firm therefore, I Take pride in giving every client my direct attention and focus. I focus on getting the job done fast while maintaining high standards.
A twenty-five year attorney and certified mediator native to the Birmingham, Alabama area.
I absolutely love helping my clients buy their first home, sell their starters, upgrade to their next big adventure, or transition to their next phase of life. The confidence my clients have going into a transaction and through the whole process is one of the most rewarding aspects of practicing this type of law. My very first class in law school was property law, and let me tell you, this was like nothing I’d ever experienced. I remember vividly cracking open that big red book and staring at the pages not having the faintest idea what I was actually reading. Despite those initial scary moments, I grew to love property law. My obsession with real estate law was solidified when I was working in Virginia at a law firm outside DC. I ran the settlement (escrow) department and learned the ins and outs of transactions and the unique needs of the parties. My husband and I bought our first home in Virginia in 2012 and despite being an attorney, there was so much we didn’t know, especially when it came to our HOA and our mortgage. Our real estate agent was a wonderful resource for finding our home and negotiating some of the key terms, but there was something missing in the process. I’ve spent the last 10 years helping those who were in the same situation we were in better understand the process.
Samantha has focused her career on developing and implementing customized compliance programs for SEC, CFTC, and FINRA regulated organizations. She has worked with over 100 investment advisers, alternative asset managers (private equity funds, hedge funds, real estate funds, venture capital funds, etc.), and broker-dealers, with assets under management ranging from several hundred million to several billion dollars. Samantha has held roles such as Chief Compliance Officer and Interim Chief Compliance Officer for SEC-registered investment advisory firms, “Of Counsel” for law firms, and has worked for various securities compliance consulting firms. Samantha founded Coast to Coast Compliance to make a meaningful impact on clients’ businesses overall, by enhancing or otherwise creating an exceptional and customized compliance program and cultivating a strong culture of compliance. Coast to Coast Compliance provides proactive, comprehensive, and independent compliance solutions, focusing primarily on project-based deliverables and various ongoing compliance pain points for investment advisers, broker-dealers, and other financial services firms.
Experienced General Counsel/Chief Legal Officer