- What does exclusive right to sell mean?
- When do you enter into an exclusive right to sell agreement?
- Are there alternatives to the exclusive right to sell clause?
- Should I sign an exclusivity agreement?
- How do I get out of an exclusivity agreement?
- 3 Tips to Enter a Successful Exclusive Right to Sell Agreement
- Find a Trusted Real Estate Agent With FastExpert
What does exclusive right to sell mean?
The first step to sell your house is to hire a real estate agent who you can trust. They will walk you through the home sale process, commission rates, and mutual expectations for working with them. If you agree to these terms, you will sign a contract to work with that agent, which will likely include an exclusive right to sell clause.
What does exclusive right to sell mean – and are you required to agree to these terms? Keep reading to develop a deeper understanding of this legal concept and when you might want to push back against it.
What does exclusive right to sell mean?
The exclusive right to sell essentially gives your Realtor ownership of your listing. Once you sign this agreement, you cannot hire any other real estate agents to list, market, and show your home. This ensures your Realtor will receive the commission on the sale if they bring in a buyer who accepts the offer.
Exclusive right to sell agreements are meant to protect Realtors. Without this agreement, you could hire multiple agents who would all compete to list your property. Each Realtor would spend time and effort marketing your home but only one would earn a commission.
When do you enter into an exclusive right to sell agreement?
If you find a real estate agent who you are excited to work with, you will enter into a listing agreement with them. This includes the exclusive right to sell, termination clauses, and other information related to your relationship with the Realtor.
Your real estate agent might do some light work to sell your house – like offering advice on improvements and conducting market research to get a pricing estimate – but most agents won’t move forward with uploading your property on the multiple listing service (MLS) without a listing agreement. If a Realtor doesn’t have this agreement, the property owner can walk away at any time and all of their efforts will go to waste.
Both the Realtor and the client sign the listing agreement and agree to the terms included. As a seller, you don’t have to accept this agreement at face value. You can make changes to the document and propose addendums to certain clauses. Both parties need to reach an agreement on the contract before they can work together.
Are there alternatives to the exclusive right to sell clause?
Not all sellers will need to sign an exclusive right to sell agreement. There are many times when a more open home sale experience is better for moving the property. Here are two alternative options to exclusive right to sell clauses consider.
Exclusive Agency Agreement
This option gives your real estate agent exclusive representation of your property. However, you do not have to pay a commission if you bring in a buyer yourself. For example, say you mention your listing to your co-worker and they are serious about buying it from you. The co-worker makes you an offer and you both move forward with the sale. You would not have to pay your Realtor because they never brought in a buyer – you did all of the marketing work.
>> AGENT ANSWERS: Requiring a home seller to sign a buyer-broker AAR?
An exclusive agency agreement is a good option if you feel confident in your ability to bring in your own buyer and navigate the home sale process yourself – from offer to closing. Keep in mind that your Realtor might not be willing to help you with the seller documents and other processes if they know they aren’t getting paid for their efforts.
This contract also doesn’t completely get you out of paying a commission. You will have to pay the fees for the buyer’s agent if they have one, even if your house sells as FSBO.
Open Listing Agreement
An open listing allows you to work with as many real estate agents as you want to sell your home. Only the real estate agent who brings in a qualified buyer that closes on the home will receive a commission. This creates an element of competition to market the property.
An open listing could be a good option for sellers who have difficult properties. If your home is severely damaged, is larger than any other house on the market, or generally would struggle to attract buyers, an open listing might be an optimal choice. You can develop a team of Realtors to sell your property.
For example, Derek Jeter sold his Tampa home (which Tom Brady temporarily rented) for $22.5 million. This was the most expensive home in the area and a landmark for tourists to see by boat. An open listing could have helped Jeter bring in more potential buyers for this tricky home sale.
Keep in mind that you will have to manage each of the Realtors you work with. It might be better to dedicate all of your time to one agent instead of spreading yourself across multiple real estate professionals.
Should I sign an exclusivity agreement?
Many real estate agents won’t work with clients unless they sign an exclusive right to sell agreement. They don’t want to risk giving up several hours to market your property, only to have their potential commissions ripped from them. As you interview different Realtors, ask if they include an exclusive right to sell clause in their agreements. If they don’t, ask them why not.
If you are certain you don’t want to enter into an exclusive right to sell agreement, make a case against it when you meet with potential Realtors. Some agents might understand why you don’t want to add this clause if you have a good reason and they will agree to move forward with the partnership. Otherwise, they might walk away from working with you. This is a risk you take.
An exclusive right to sell clause is standard for most home sales. Once you sign the contract, your Realtor will start bringing in buyers who might be interested in your home.
How do I get out of an exclusivity agreement?
If you are still uncertain about entering into an exclusive right to sell listing, know that you have options if you want to back out of this contract. Most listing agreements are only valid for a set period of time (usually 30 to 120 days). After the agreement expires, you can end your relationship with your Realtor if you no longer want to work with them – as long as they haven’t found a buyer. You can also fire your Realtor if you are unhappy with their performance if they haven’t found a buyer.
This process gets more complicated if you have already accepted an offer from a buyer who your Realtor found. In this case, you can fire your Realtor, but they will still receive a commission on the sale. Similarly, if the contract expires before the closing date but the buyer is still moving forward with the purchase, your Realtor will still receive a commission once the sale goes through.
However, if you have an exclusive right to sell agreement with a Realtor who has yet to bring in a buyer, you can either request a change to the contract or terminate the agreement with your agent. From there, you can hire a Realtor who is better suited to work with you.
3 Tips to Enter a Successful Exclusive Right to Sell Agreement
Depending on the real estate best practices in your area, you might not have much flexibility when entering into an exclusive right to sell agreement. If the practice is standard where you live, you might have to sign one of these agreements before a listing agent will work with you. Fortunately, you have rights. Here are a few ways to make sure the right to sell clause works for you.
- Limit your contract period: you don’t have to agree to a 180-day contract period with your agent. Consider requesting a 30 or 60-day contract with the option to extend it or end it as needed.
- Detail your cancellation options: make sure the contract includes a process for canceling the contract, including how to cancel it and why. You can detail a list of reasons why a contract cancelation would be appropriate. Leave the door open for additional reasons that were not included.
- Read every aspect of the contract: don’t trust your Realtor to gloss over each section. Sit with them as they review what each clause and definition means. You can also contact a real estate attorney to review your contract before you sign it.
Furthermore, make sure you are confident in the Realtor you are hiring. Interview multiple agents and let them know there are multiple people vying to sell your property. This will give you confidence in choosing the right Realtor while ensuring the agent you hire stays motivated to sell your house fast.
Find a Trusted Real Estate Agent With FastExpert
An exclusive right to sell clause won’t make or break a good Realtor. If you trust your agent to do their best for you, then an exclusive right to sell shouldn’t be an issue. It is better to work with one quality agent instead of multiple average ones.
At FastExpert, we recommend top real estate agents to sellers who are ready to move from their homes. We are the #1 trusted platform to search, compare and hire the best agents. Our service is free to use and you aren’t obligated to hire the Realtors we recommend. Our goal is to help you work with someone you can trust.
Learn more about FastExpert for sellers and take the first steps to list your home today.