An exclusive right-to-sell agreement in real estate is a contract between a listing agent (or seller’s agent) and a property owner. A right-to-sell agreement is one of the four main types of listing agreements. As a real estate agent, you need to be able to explain how each type of contract works and clear up common misconceptions about the exclusive right-to-sell contract.
Here’s some help for want-to-be real estate agents learning about the industry.
Key Takeaways
- An exclusive right-to-sell agreement gives real estate agents full authority to handle every aspect of the transaction, including marketing, negotiations, and closing, ensuring a professional approach from start to finish.
- Agents benefit from the assurance of receiving a commission regardless of who finds the buyer, motivating them to invest in strategic marketing and selling efforts to secure a successful sale before the contract ends.
- Although the agent manages the transaction, the homeowner retains control over key decisions such as setting the asking price, accepting or rejecting offers, and possibly terminating the contract if needed.
- The contract benefits both parties. The seller enjoys professional expertise and a smoother transaction. At the same time, the agent is incentivized to sell the property quickly and efficiently due to the guaranteed commission.
What Is an Exclusive Right-to-Sell Listing Agreement?
In real estate, an exclusive right to sell is a type of listing agreement between a property owner and an agent or broker. Under this agreement, the real estate professional has the exclusive right to market the property for a specified period. If the property sells while the broker has the listing, the seller must pay the agreed-upon commission regardless of who found the buyer.
This differs from other types of listing agreements, such as an exclusive agency agreement or open listing agreement, both of which do not guarantee a commission to a real estate agent.
How an Exclusive Right-to-Sell Agreement Works
An exclusive right-to-sell agreement grants real estate agents full authority to represent the seller in every aspect of the transaction, from marketing and negotiations to managing the details of the closing process. In exchange for this exclusive representation, the seller agrees to pay the agent a commission, regardless of who ultimately finds the buyer – even if it’s the seller themselves.
An exclusive right-to-sell agreement typically lasts between three to six months. However, the duration can vary based on local market conditions and negotiations between the seller and the agent. The terms of the contract outline specific obligations for both parties, including the commission rate, the agent’s responsibilities, and any conditions under which the contract can be terminated. If the property remains unsold by the end of the contract, the seller may choose to renew the agreement, switch agents, or opt for a different type of listing arrangement.
An exclusive right-to-sell is the most common listing agreement.
Related Article: Exclusive Agency vs. Exclusive Right-to-Sell in Real Estate
Obligations of the listing agent in a right-to-sell agreement
Under an exclusive right-to-sell agreement, the listing agent handles all tasks associated with selling the property. This typically includes:
- Marketing the property: Under this type of contract, the listing agent is responsible for creating listings, taking professional photographs, and advertising the property for sale.
- Hosting open houses and showings: Agents with this type of contract are also typically responsible for organizing and managing open houses and coordinating private showings for interested buyers.
- Negotiating offers: As a real estate agent, you will act as an intermediary between the seller and potential buyers to negotiate offers, counteroffers, and other terms of the sale.
- Managing paperwork and closing: Agents with a right-to-sell agreement will handle contracts, disclosures, and inspections. They will also ensure all documentation is completed for a smooth closing process.
With a right-to-sell agreement, the agent’s efforts are focused on selling the property at the highest possible price within the timeframe specified in the contract.
Rights of the homeowner in a right-to-sell agreement
While the agent has authority over the marketing and negotiation process, the homeowner retains key rights throughout the transaction. These include the following:
- Setting the asking price: The homeowner has the final say in determining the property’s listing price, although the agent will likely offer guidance based on comps and market conditions.
- Accepting or rejecting offers: Even though the agent negotiates on behalf of the homeowner, the seller ultimately decides which offers to accept, reject, or counter.
- Requesting termination of the contract: Depending on the terms of the contract, if the homeowner is dissatisfied with the agent’s performance, they may be able to request termination of the agreement.
Overall, the exclusive right-to-sell agreement clearly frames the partnership between the seller and the agent, outlining their respective roles and responsibilities.
Benefits of an Exclusive Right-to-Sell Contract for the Agent & Property Owner
A right-to-sell contract has many benefits – for both the real estate professional and the property owner.
For the property owner, an exclusive right-to-sell contract guarantees the following:
The agent’s professional expertise leads to a smoother sale. Sellers benefit from the real estate agent’s professional expertise, as the agent is fully committed to the sale. Their knowledge of the local market, negotiation skills, and familiarity with the legal aspects of the transaction contribute to a smoother, more successful selling experience, freeing the seller to focus on other priorities.
The agent has an incentive to sell the property before the contract ends. Agents operating under exclusive right-to-sell agreements are typically more willing to invest heavily in marketing. Since they are guaranteed a commission regardless of who finds the buyer, they are motivated to maximize the property’s exposure and target the ideal audience to facilitate a sale before the contract ends.
Of course, an exclusive right-to-sell contract also benefits the agent.
The agent is assured of receiving a commission with this type of contract. As an agent, you can rest easy knowing that you will be compensated for the sale – as long as you follow the contract’s terms – regardless of who finds the buyer.
Common misconceptions
As you discuss your listing agreement with your client, you must articulate that they will still have control over the final sale. Under an exclusive right-to-sell contract, the property owner has the final say on the sale price and terms.
Real estate agents must have excellent negotiation skills. Fortunately, those skills can be developed by shadowing experienced agents, practicing, and training. Colibri Real Estate School offers negotiation training and certifications through the Real Estate Negotiation Institute (RENI). See what our students say about RENI courses and enroll today.
