There are different types of listing agreements that sellers can choose from when it comes time to sell their homes. But the most popular type of listing by far is the “exclusive right to sell” listing. In fact, it’s not very often that another type of listing contract is used in real estate.
An exclusive right to sell listing essentially gives the seller’s agent total control over the transaction and receives the commission no matter where the buyer comes from. Regardless of whether the listing agent, the seller, or a cooperating agent finds a qualified buyer, the listing agent will still earn the commission. If another cooperating real estate agent is involved in the transaction by bringing a buyer to the table, the commission is usually split between the agents. How the commission is split will depend on the exact details of the contract.
Most of the time, exclusive right to sell listings expire after anywhere between 90 to 120 days during which time the seller gives the listing agent an opportunity to market the home and attract a buyer. The seller has the option of renewing the listing after it expires if the home doesn’t sell within that time frame.
What’s the Difference Between an Exclusive Right to Sell and Exclusive Agency?
It’s important to differentiate between an “exclusive right to sell” listing versus an “exclusive agency” listing. With the latter, a real estate agent is contracted to sell the home. If that agent is able to find a qualified buyer that leads to a successful sale, then the agent will receive the agreed-upon commission from the seller.
However, if the seller finds a buyer on his own, no sales commission is owed to the agent. Unlike an exclusive right to sell listing, an exclusive agency listing does not give control to the seller’s agent over the final outcome of the transaction, regardless of how much work was put into marketing the property.
What About Open Listings?
An open listing differs from an exclusive right to sell listing in that no single real estate agent has a right to get paid commission. Having said that, no single broker has the responsibility to act on the seller’s behalf in terms of marketing or negotiating. A seller can have an open listing with a number of agents who will all have the right to market the property and find a qualified buyer. The agent who finds a buyer and closes the deal is the one who will be paid commission.
What Terms Should Be Included in Your Listing?
If you’ve determined that an exclusive right to sell listing is right for you, the terms that are included can be customized and negotiated. Typically, the following terms are included in these types of contracts:
- Listing price
- Listing type
- Terms of sale
- Expiry date of the contract
- Personal property that’s included
- Fixtures that are not included
- Amount of commission to be paid
- When commission will be paid
- Whether your property will be listed with the MLS
- Specific responsibilities of the agent
- Specific times and days the property will be available for showings
Be sure to carefully review the details of each term included in the listing. If there’s anything you’re unclear about, make sure you inquire with your agent before you sign the contract.
The Bottom Line
Considering the various listing agreements and how each affects both sellers and their agents alike, it would be wise to gain an understanding of what they are before signing the contract. Having said that, the “exclusive right to sell” listing is by far the most common listing agreement signed by sellers and agents. Just make sure that you take the time to go through each clause in the agreement and ask questions where applicable. Your agent will be happy to clear up any confusions you may have.