What Is an Exclusive Listing?
An exclusive listing is a type of real estate listing agreement in which a property seller appoints and specifically authorizes one real estate broker to act as the seller’s sole agent. By contrast, in an open, or non-exclusive listing, the seller has the right to employ any number of brokers as agents.
Key Takeaways
- An exclusive listing is a type of real estate listing agreement in which a single broker is appointed as the seller’s sole agent.
- In an exclusive agency listing, the seller retains the right to sell the property, with no obligation to the broker.
- With exclusive right-to-sell listings, the broker receives a commission regardless of who sells the property.
- Exclusive listings give sellers greater privacy and control over testing prices in the market.
- Because you're working with a smaller circle of buyers, exclusive listings generally receive fewer offers and you're more likely to have a potential conflict-of-interest with your agent.
How an Exclusive Listing Works
A listing agreement is a contract under which a property owner (as principal) authorizes a real estate broker (as agent) to find a buyer for the property on the owner’s terms, a service for which the owner pays a commission.
To understand how an exclusive listing works, it’s helpful to first consider open listings. In an open listing, the seller retains the right to employ numerous brokers as agents. The seller is obligated to pay a commission only to the broker who successfully produces a ready, willing, and able buyer. If the seller finds a buyer without the help of any of the brokers, then the seller isn't obligated to pay a commission to anyone.
An exclusive listing works differently. In an exclusive listing, only one broker is specifically authorized to act as the exclusive agent of the seller. That means one broker has the sole right to market, show, and sell the property. Other brokers are excluded from trying to sell the property while the agreement is active.
Types of Exclusive Listings
There are two types of exclusive listings: exclusive agency and exclusive right-to-sell listings. Both types of listings work specifically with one agent. However, they vary in the way that commissions are structured.
Exclusive Agency Listing
One broker is appointed to act as the exclusive agent for the seller. The seller retains the right to sell the property, with no obligation to the broker. However, the seller is obligated to pay a real estate commission to the broker if the broker is the procuring cause of the sale.
Exclusive Right-to-Sell Listing
An exclusive right-to-sell listing is the most commonly used real estate contract. With this type of listing agreement, one broker is authorized as the seller’s sole agent and has exclusive authorization to represent the property. While the listing agreement is in effect, the broker receives a commission no matter who sells the property.
Note
The primary difference between exclusive agency and exclusive right-to-sell relates to commission fees. In an exclusive agency listing, the seller only pays fees if the agent sells the property. In an exclusive right-to-sell agreement, the seller must pay realtor fees regardless of whether the property is sold.
Pros and Cons of Exclusive Listings
Pros
Develop longer-term relationship with one agent
Potentially more motivated selling agent
Seller can test market with possibly fewer price changes
Gives seller more control over who views the property for sale
May weed out non-serious bidders
Cons
More complicated fee structures than open listings
May not sell property as quickly due to lower exposure
Somewhat controversial because they can reduce price competition
Higher chance of conflicts of interest with agent who also represents the buyer
Pros of Exclusive Listings
Develop longer-term relationship with one agent: With an exclusive listing, you are more likely to start a deeper working relationship with a single real estate agent because this agent is the only party responsible for the sale of your property.
Potentially more motivated selling agent: You may experience that the real estate agent is more driven to execute the sale. This may include strategic recommendations in areas such as marketing, advertising, and renovation to attract higher offers.
Seller can test market with possibly fewer price changes: An exclusive listing also gives the seller an opportunity to get a feel for the market with fewer future consequences of price changes. If your property is openly listed on the Multiple Listing Service (MLS), the general public will know your initial asking price and will see it every time you change this asking bid.
Gives seller more control over who views the property for sale: Exclusive listings are more suitable for sellers who want to control who and how many people are going in and out of their homes during the sale of property.
May weed out non-serious bidders: To cut down on non-competitive house seekers, sellers with an exclusive listing can focus on only qualified buyers that are serious about submitting bids by restricting who has an incentive to sell your property.
Exclusive listings offer a certain level of privacy to a seller, so celebrities and notable public figures often exclusively list their properties and rely on a real estate agent within their network.
Cons of Exclusive Listings
More complicated fee structures than open listings: While some real estate agents may charge a lower commission, they may charge higher fees or include/exclude other benefits as part of the agreement.
May not sell property as quickly: If you're hoping to sell your property fast, exclusive listings may not be the best path for you. Exclusive listings have limited exposure, as the offering isn't publicly listed.
Somewhat controversial: Proponents of open listings cite that exclusively listing your property reduces competition in the neighborhood, affects the accuracy of home prices potential buyers may see, and negatively impacts information available to other sellers.
Higher chance of conflicts of interest with agent: If the single agent is responsible for finding a buyer, that buyer may in turn decide to use that exclusive agent on their behalf. Though a real estate agent would owe both parties a fiduciary duty, it may be more difficult to speak freely and express your concerns with an agent who is knowingly communicating and representing the buyer as well.
Concerns About Exclusive Listings
An exclusive listing can often be referred to as a pocket listing, or off-market listing. When entering into an agreement with only one real estate agent, consider the duration of the agreement. Depending on the terms and timing of the agreement, you may not be required to pay a commission, should they be unable to find a buyer within a specified time.
Ensure your exclusive listing agreement stipulates what happens if certain unfortunate circ*mstances should occur. For example, you or the buyer may fail to meet any number of approval contingencies. In this situation, understand the financial ramifications you owe to the agent if a deal progresses but eventually falls through.
What Is an Exclusive Listing?
An exclusive listing is a method of selling real estate property by working directly with just one real estate agent. Instead of publicly listing your home for sale, you agree to let a single real estate agent attempt to find buyers and manage the sale process.
Why Should I Exclusively List My Home?
Exclusively listing your home results in greater privacy and price control over your listing. You'll have to work with fewer agents, and you have control over who can visit your property, which may be important for sites under development or major renovation.
Do Exclusive Listings Get Higher Offers?
Homes exclusively listed often take longer to sell due to there being fewer people viewing the property. For this reason, you're more likely to receive fewer offers and less competition on your listing. While a higher price isn't necessarily guaranteed, exclusive listings can benefit a buyer by giving them a greater ability to explore pricing without public knowledge.
What Is the Difference Between Exclusive Agency and Exclusive Right-to-Sell Listings?
An exclusive agency listing results in a commission being paid to the real estate agent, should the home be sold by that agent. However, no fees are due if someone else sells the home. Otherwise, an exclusive right-to-sell listing results in the real estate agent's receiving a commission regardless of who sold the property.
What Is the Difference Between Exclusive and Non-Exclusive Listings?
Exclusive listings are private sales in which a seller agrees to work only with one specific real estate agent during a sale. That real estate agent attempts to solicit bids from qualified buyers. Non-exclusive listings entail publicly listing a house for sale and potentially working with any real estate broker that brings a potential buyer to you.
The Bottom Line
An exclusive listing is one in which a property seller appoints and specifically authorizes a single real estate broker to act as the seller’s sole agent. On the other hand, in an open, or non-exclusive listing, the seller has the right to employ any number of brokers as agents. Both types of property listings have pros and cons for sellers that you should be aware of before choosing either.
