Understanding an Exclusive Agency Listing

An exclusive agency listing agreement is a real estate agreement that grants a listing broker the exclusive right to represent a seller as the selling agent. If the real estate broker sells the home, the homeowner pays a listing commission. The listing agent can also work with another brokerage and buyer's agent to bring in a buyer. In this case, the seller would pay both the listing commission and the selling commission.

However, an exclusive agency agreement comes with more risks for the listing broker. If the house sells through the efforts of the homeowner, they do not pay the agent's commission. In contrast, an exclusive right-to-sell agreement gives the listing agent exclusivity and a commission whether they bring in the buyer or the seller does.

Agency listings can benefit sellers but not always real estate agents. It’s why brokers generally don’t prefer the agreement. When used, the listings include a few of the following elements:

1. 1. Property description: The exclusive agency listing agreement should include a description of the property.
2. 2. Required terms of sale: Most states allow exclusive agency listings, but the specific base terms may differ from state to state. Therefore, an agreement must clarify local terms to the sellers. For example, most states do not allow net listing—when the seller and the listing agency set a price, the listing agent sells the house for a higher price and then retains the difference as their commission.
3. 3. Terms and conditions: The state-required terms of sale are the basic terms, and both parties should determine the terms and conditions specific to the property. Terms and conditions establish the broker’s authority, the specific terms they will fulfill, the promise of compensation, and the commission rate.
4. 4. Timeline: The agreement will outline the duration of the listing, including a termination date. This allows the seller to start a new listing contract with the same broker or find someone else they believe will close the sale.

Realtors do not favor exclusive agency listings as they could lose out on a commission if the seller finds a buyer themself. Real estate agents may seek a listing agreement with a guaranteed commission. Here are a few other types of listing agreements:

• Open listing: An open listing agreement grants a homeowner the right to sell their home on their own. Sellers can work with several real estate brokers and agents at the same time and are only obligated to pay the broker who brings them the buyer whose offer goes through. If the seller finds the buyer themselves, they are not obligated to pay any brokerage fees.
• Net listing: In this type of listing agreement the seller provides the base net listing price they will accept. If the sales price is higher than the net price, the broker keeps the difference. This listing type is illegal in some states.
• Multiple listing: A multiple listing agreement is a “for sale by owner” (or FSBO) agreement. Here, an owner pays a fee to place their home on a multiple listing service (MLS), a digital database that allows brokers and buyers to find homes currently on sale. Meanwhile, the seller is responsible for selling their house without a broker, relieving them of broker fees but making them responsible for the duties that an agent or broker would usually cover.
• Exclusive right-to-sell: This exclusive right-to-sell listing agreement gives the broker or real estate agent exclusive rights to earn a commission for the sale of a property, even if the homeowner finds their own buyer. In addition to covering the commission, the owner also covers the costs of the listing fees.

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