Even a good chunk of Realtors surveyed did not know the correct difference between Exclusive Right to Sell and Exclusive Agency.
Exclusive Agency vs. Exclusive Right to Sell: What’s the Difference?
Most real estate listing agreements are exclusive right to sell, meaning no matter who finds the buyer, the listing brokerage is entitled to the whole commission as originally negotiated. So even if you find the buyer yourself, whether it’s a family member, co-worker, friend or neighbor’s friend, you still pay the full commission.
The Path to Freedom in Your Home Selling Contract
Thankfully there is an alternative! An exclusive agency agreement guarantees your listing agent a commission when they or another agent sells the home. According to the Pennsylvania Association of Realtors,
An exclusive agency relationship is different. As an exclusive agent for the seller, the broker is obligated to be loyal to the seller by acting consistently with the seller’s best interests and by making a continuous good faith effort to find a buyer/tenant for the property[…] The broker is not going to get paid, however, if the seller finds his/her own buyer or tenant.
Sellers ought to keep in mind that most real estate agents who know the difference shy away from the exclusive agency transactions. After all, the listing company could spend thousands of dollars marketing a home and in the end not receive any compensation if the seller is successful in finding a buyer.
Pro Tip 1: Know the difference between an Exclusive Right to Sell and Exclusive Agency Agreement.
Pro Tip 2: Be prepared to handle an agent’s objections when asking for an exclusive agency agreement. If a Realtor says the cost to list and the risks are too high to offer an exclusive agency agreement, ask what it would take to reduce the typical costs associated with a listing. If your property isn’t included in their print advertising and “just listed” postcards are not sent out, then where is the cost? An agent may say that the company has a policy against offering exclusive agency. You can reply with, “So no one in your company has ever offered one before?” Another reply could be, “So you would rather risk us not listing with you than ask your broker to make an exception?” As a seller, you can get saucy about it by saying, “Part of the reason we’d like to hire you is your negotiation skills. Can’t you work something out with your broker, just this once?”