Otherwise known as exclusive authority, an exclusive agency agreement is a common practice in the real estate industry – but how exactly does it all work?
Your house is often your biggest financial asset, and making the decision to sell is never easy. The commission paid to a real estate agent is often the largest outlay when it comes to selling property, which makes it one of the biggest decisions involved with the process. This pressure is only exacerbated by the process of an exclusive agency agreement, but what exactly is it?
What Is An Exclusive Agency Agreement?
Once you’ve decided to sell your home or property, there are a great number of real estate agents for you to choose from. However, once you’ve settled on one, it’s common for them to request an exclusive agency agreement.
An exclusive agency agreement, otherwise known as an exclusive right to sell listing agreement or an exclusive authority, is when vendors give exclusive selling rights to one real estate agent for a designated period of time. While the agreement is in place, sellers are not permitted to use the services of any other real estate agents, meaning your selected agent has exclusive access to selling your home, and in turn making the associated commission from it. Sometimes, certains stipulations may be added to a contract with the agency of choice that allow the commission to be waived, such as selling to friends or family.
On the other hand, the alternative is an open listing agreement, which allows the owner to retain the right to sell the property. They can have an open agreement with multiple real estate agents, and will only pay commission to the agent that finds the buyer. If the seller finds the buyer themselves, they do not have to pay any commission. When opting for this type of agreement, sellers will usually do a lot of the work themselves, so agent fees are often significantly lower than with other listing agreements.
If you’re a homeowner and debating whether to opt for an exclusive agency agreement, it’s important to treat the contract just like any other binding agreement – once you’re in, you’re in. There are several pro’s and con’s associated with the practice, with a handful including the following.
Pro: You’re The Priority – Knowing that there are no other agents competing for the sale of the property, and in turn the commission, an exclusive agency agreement positions you as a top priority for the real estate agent in question.
Pro: Sell For The Best Price – As a priority, you also have access to all of the real estate agent’s best resources, such as their marketing tools, their contacts, and of course, their time, which all go a long way when it comes to landing the best possible sale price for your home.
Pro: Clear Communication – Selling a home or property can be exhausting, especially when you’re trying to work with multiple industry professionals. By opting for an exclusive agency agreement, you narrow this down to one agent, and in turn ideally build a rapport.
Con: Limited Flexibility – If you sign an exclusive agency agreement, you waive the right to sell the property yourself. It can also be a more expensive process, particularly if you manage to find a buyer on your own as you still have to pay the associated commission.
Con: It May Take Longer – If it’s not a seller’s market, it may take longer to find the right buyers if you opt for an exclusive agency agreement. Take care as to what listing term you agree to, such as thirty days, ninety days, or even up to six months.
Con: You Could Get A Dud – In the event that you and your selected real estate agent in question simply don’t gel, you’re effectively stuck with each other. Be sure to do your research and check testimonials, to ensure that you’re going to be happy with the agent’s performance.
Take The Stress Out Of Selling Property
A completely free service, Emergency Services Property Advisors provide property advisor services to Police, Fire, Ambulance and S.E.S personnel and their families right across Victoria.
Luke and the team at ESPA are passionate about providing support to some of Australia’s most valued public servants. Along with key industry insights, ESPA also works with a broad range of service providers linked to the real estate industry such as conveyancers, trades, legal practitioners and mortgage brokers.
If you are an emergency services worker looking to potentially buy or sell property in the future, please get in touch with Emergency Services Property Advisors today to discuss how we can turn your real estate dreams into reality, or call Luke directly on 0414 757 705.
