Several types of brokerage listing contracts are available when it's time to sell your home. The exclusive agency listing, although not the most popular among real estate agents, is a listing contract by which the seller hires a real estate broker as the exclusive agent for a specific period of time. A commission is payable to the agent only if he finds the buyer, not if the seller finds the buyer aside from the efforts of the agent.
Exclusive Agency Listing Key Difference
This exclusive agency listing agreement is very similar to the commonly used exclusive right-to-sell listing agreement. However, one key factor differentiates the two listing types. The exclusive agency agreement limits the commission payable to the listing agent -- and is rewarded only with a sale from a buyer working through the broker or other real estate company. The exclusive right-to-sell agreement guarantees the real estate agent a commission no matter who the buyer is and how he came upon the property.
Frequency of Use
Unlike the exclusive-right-to-sell listing agreement, the exclusive agency agreement is not very popular amount real estate agents and brokers. This is because an agent is likely to spend a fair amount of time and effort marketing the property without any concrete assurance she will receive a commission for her efforts. If the seller finds his own buyer and proceeds to closing, the real estate agent is left without any compensation for the work that she completed.
Unethical Behavior Pitfalls
Another issue with exclusive agency listings is that this type of arrangement leaves some wiggle room for unethical behavior on the part of the seller and prospective buyer. It can be very difficult to prove that the marketing efforts of the agent caused the buyer to purchase the home. To avoid paying a commission, many sellers are tempted to deny that it was the agent's work that directly led to the sale.
Review All Listing Agreement Details
The complexity and multiple variations of listing agreements make it a good idea to always ask questions about each agreement's terms and conditions. Make sure each item you discuss with your listing agent is properly represented in writing. It doesn't hurt to have an attorney review your contract in case you find any confusing segments. Details such as type of listing, price, length of term, showing instructions, commission percentages and responsibilities of the broker are important elements to cover.
Meribeth Phipps has been a real estate broker since 2000, specializing in residential new home sales. She holds a bachelor's degree in business and marketing.