Exclusive Agency Listing

exclusive agency
An exclusive agency listing is sometimes a good compromise for a For Sale By Owner. © Big Stock Photo

Definition: An exclusive agency listing is similar to an open listing, except the major difference is the broker will represent the seller. The seller still reserves the right to sell the property herself and not pay a commission. The broker is free to cooperate with another brokerage, meaning the second brokerage could bring an able buyer whose offer the seller accepts. Typically, the broker is paid a listing commission that is shared with the selling broker, so the seller pays both sides of the commission (listing and selling).

Why Would an Owner Agree to an Exclusive Agency Listing?

The exclusive agency listing is used sometimes as a compromise. This is for the potential For Sale by Owner (FSBO) seller who says she wants to sell her home herself but if she were to hire a real estate agent, why, she would hire, say, the Super Duper Realty Brokerage. The reason Super Duper Realty Brokerage would entertain such a listing is because it might be better than no listing at all, plus, there is the huge possibility that the seller will not sell the home herself as a For Sale by Owner. Many FSBOs eventually give up when the home does not sell and they hire a real estate agent.

It sort of gives both parties a bit of what they both want. Perhaps the seller fully expects to sell the home herself. Perhaps Super Duper Realty Brokerage fully expects an exclusive right to sell listing agreement and desires to be paid for its efforts.

It is not unusual for a real estate brokerage to desire an exclusive listing agreement, a contract that will pay only the Super Duper Realty Brokerage and not a competing broker.  If a competing broker brings the buyer, Super Duper Realty Brokerage will pay that broker.

The Inner Workings of an Exclusive Agency Listing

An exclusive agency listing means only Super Duper Realty Brokerage can represent the seller.

That, in itself, is a partial victory for Super Duper Realty Brokerage. However, by giving the seller the right to sell the home herself, it gives the seller the ability to avoid paying a commission if she should find her own buyer. In that event, the seller would receive no representation from the brokerage, and the buyer most likely would be unrepresented as well. Both parties receive a partial benefit.

On a practical side, an exclusive agency listing involves detailed monitoring. Under an exclusive agency listing, most likely the brokerage would manage all contact with other brokers and home buyers, to prove that the eventual buyer originated through the efforts of Super Duper Realty Brokerage. This is the drawback from a brokerage point of view because an exclusive right to sell listing pays the listing broker regardless of how the buyer found out about the property, and that's a protection that many main stream brokerages demand.

Why Don't More Agents Utilize Exclusive Agency Listings?

The excessive monitoring is one of the reasons we don't see very many exclusive agency listings today. In fact, if you asked a real estate agent to explain exclusive agency to you, most agents could not.

Not because they don't understand it, although that could be part of the reason, but because very few use it. An exclusive agency listing presents the possibility that an agent might expend a lot of effort for which there is no financial reward.

Another compromise some agents have used is to set a time period on the exclusive agency listing and if the seller is unable to produce a buyer through her own efforts within, say, 30 days, for example, then the parties could make a separate agreement to automatically convert the listing to an exclusive right to sell listing at that time.

At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

 

Common Misspellings: Inclusive Agency

Examples: The owner gave Smith Brokerage an exclusive agency agreement.

Since Smith found the buyer, Smith earned both ends of the commission and acted as a dual agent.