Exclusive Agency Listings vs Exclusive Right to Sell
Thinking about or ready to sell a home? Arranging the sale process can be as important as preparing the home for what lies ahead. Determining whether to select an exclusive agency listing vs. exclusive right to sell is the first important step.
This is separate from, but does not take away from, needing to determine the scope of needed repairs or upgrades. Those decisions need to happen regardless of how the potential sale will be arranged.
Of course, a seller is not required to work with a licensed real estate professional. For example, some sellers prefer to explore selling their home quickly “As Is”. They can receive an all cash offer from an investor, like Staten Island All Cash, and save maintenance or repair costs. Some prefer to try to market and sell the property themselves.
Those that prefer to have a licensed real estate agent handle the transaction have a different decision to make. That decision goes beyond interviewing and selecting the agent and company they represent.
Some sellers prefer to be more involved in the sale process. It could be DIY repairs, researching prices, or helping to generate buyer leads. Other sellers prefer to make one phone call and let the agent they choose handle every single detail.
Knowing which category you fit into as a seller is an often overlooked important step. This is what best determines whether you go with an exclusive agency listing vs. exclusive right to sell.
An “exclusive right to sell” means that the agent assigned to the listing receives the agreed to commission. This happens even if the seller or a friend produces the eventual buyer. The commission would be split with the agent representing the buyer, which is also handled by the selling agent.
Knowing The Difference
With an “exclusive agency listing”, the seller would pay the agreed to commission only if that agent brings the eventual buyer. Under this plan, the seller has the option of (also) advertising or marketing the property themselves. If the seller finds the eventual buyer directly, they would not be required to pay a commission to the agent. Such circumstances may or may not impact how or whether the buyer’s agent receives a commission.
Typical commissions (covering both the buyer and seller agents) range from 4% to 6% of the agreed to purchase price. In most cases, the commission received by the realty agent is shared by that agent. The brokerage they represent receives a share of the agent’s commission. In addition, funds spent on advertising and marketing the property are included within the commission fee.
The amount and distribution of the commission is not effected by whether it is an exclusive agency listing or an exclusive right to sell. Consequently, a realty agent is likely to do everything possible to convince the seller. They will want the seller to sign an exclusive right to sell agreement at the start.
Understandably, an agent wants to be guaranteed to receive his/her commission if the property sells within the agreed to time frame.
THE TIME FRAME
In either case, the agent will provide a time frame under which he/she must sell the property. This time frame is typically 90 days to one year. If the time period passes and the property does not sell, the listing expires. The seller then has the option of hiring another agent or trying to sell on their own. Another option is to take the property off the market.
How much or little a seller wishes to be involved is a key factor in determining which way to go. Knowing the difference between exclusive agency listings vs. exclusive right to sell can be helpful.