A Brief Introduction About the Exclusive Agency Agreement
An exclusive agency agreement is an agreement that binds a principal and an agent in an association and limits them to make any identical deals with the other’s rivals.
Exclusive agency listing agreements are mostly utilized with flat-fee listing brokers who give limited service towards their customers. In this form of agreement, the listing broker functions as the real estate seller’s agent or representative. Though, they are only compensated with a commission if the property is sold through their efforts. In case the seller is acquired in some other way, like by the marketing efforts of the seller, the agent won’t have any owing a commission.
A written listing agreement was furnishing a sole agent the right towards selling a property for a stated time but reserving to the proprietor the right towards selling the property himself without any due commission. The exclusive agent is permitted to a commission if he or she individually sell the property or if it has been sold by someone apart from the seller. It is exclusive in terms of the property is listed with only one broker. The multiple listing services should accept exclusive-agency listings submitted through participating brokers.
Who Takes the Exclusive Agency Agreement?
An Exclusive Agency Listing is a legal agreement made between a seller and a real estate entity or agent granting the entity or agent the right towards being the only entity or agent to market and sell a property, apart from the seller retains the right towards market and sell the house to a buyer without having to pay a commission towards the listing agent, if the seller finds the buyer individually of the agent or entity.
A contractual agreement in which the listing broker works as the agent or as the lawfully recognized non-agency representative of the seller, as well as the seller settles to pay a commission towards the listing broker if the property is being sold through the efforts of any real estate broker.
Purpose of the Exclusive Agency Agreement
The exclusive agency agreement is an agreement in which a charge that is owing to the broker in case the broker sells the property. If the owner sells the property, the broker is owed nothing. This contract is unilateral since nothing owes unless the broker produces a buyer.
This kind of listing agreement becomes a bilateral agreement after and if the broker produces a buyer since, at that point, both individuals have responsibilities that should be fulfilled and could be enforced. This entity of agreement is generally express due to the listing agreement covers the details to which both individuals agree.
Exclusive right vs. exclusive agency denotes two kinds of listing agreements amid real estate owners and the agent who is assisting in selling the real estate. The main difference among an exclusive right-to-sell and exclusive agency listing is whether or not a commission would owe. In an exclusive right-to-sell agreement, the seller would be liable for paying the realtor charges even if they find the buyer totally on their own. Through an exclusive agency listing, the seller would only pay charges if the realtor finds the final buyer.
The two diverse kinds of listings are not titles of agreements but a section of the body for the agreement, so you would read through your entire agreement to find out which listing agreement is in there.
The exclusive agency generally furnishes the terms on which on an exclusive basis, a principal involves an agent. Few representations and assurance are given, as the agent is a director of that firm or that entity. Limits, powers, and payment of the agent are set out for the time or term of the agency as per the detailed tasks the agent would perform.
Contents of the Exclusive Agency Agreement
The individual agrees on:
- Confidentiality: Information that is revealed by one individual to the other individual, if disclosed to the public, would be considered a breach of contract.
- Effective date: From the date, the contract would become valid.
- Net Product Sales: On purchase orders for Product payments received by the firm.
- Grant of Right: Limitations on Agents and Firm’s activities and reservation of rights by the firm.
- Trademarks: Ownership of trademarks acknowledgment through the agent on the Firm’s exclusive ownership.
- Obligations of Agents: Marketing as well as promoting the goods in the territory, partaking in trade shows and fairs.
- Expenses and Commissions: As payment for its services during the term, a commission of % of the net product sales shall be paid to the Agent.
- Non-Competition: Agent would not, directly or indirectly, market, sell or endorse the sale of competitor goods.
- Additional terms are also stated in the contract to maintain a lawfully bound relation.
How to Draft the Exclusive Agency Agreement?
Terms should be agreed on by the seller as well as the agent for an exclusive listing. Those details would comprise establishing a time frame for the agreement towards being in force. This can be 6 months or even short-term when demand is high within the market. There should also be an agreement on the size of the commission the agent could make on a sale.
An exclusive listing agreement might comprise a list of exempted individuals who could purchase the property without the agent making a commission. These exemptions usually consist of family members or close connections who the seller favors towards buying the property.
The exclusive agency agreement could function as a protection period to prevent the seller from mistreating an agreement to escape from paying a commission to the agent for carrying out their job. The protection period shall permit the agent to receive a full commission on a few sorts of sales after the expiration of the agreement.
Benefits and Drawbacks of the Exclusive Agency Agreement
In the beginning, it may seem like a great concept that you pay a lower commission, and you get to carry out your advertising and marketing. And if you sell the house by yourself, you are not required to pay the commission.
This may sound interesting, while you may have to pay a higher commission at the end, owing to the advertising and additional charges being higher.
But, there are a few unique advantages here.
- Your real estate agent would work much harder for you
- You would develop a true working association with them
- The agent would try to get the highest possible charge for the property
- An exclusive listing usually attracts good offers
Working with a trustworthy agent implies that they would work with you. They may even propose some changes that might raise the value of your property beyond what the changes would cost.
And, they will manage to work out a plan that would get you higher offers. You could discuss a few advantages or disadvantages of the auction while selling with them.
The shorter version is that with this condition, you get a professional working for you. Through an open listing, agents may contend against each other rather than working for you. They might convince you to receive an offer which is not in your best interest. Your property is not their priority, but their exclusives are.
Before deciding on an agent, you will have to select them carefully, and you should not make your decision only on the commission. Some may give you a lower commission and afterward may charge higher fees.
Some may give you a higher fee and comprise advertising. Make certain that you have everything you require to make a knowledgeable decision.
You should also read the fine print before signing the contract. Also, ensure to pay attention to the period, a few agents might work hard to get you to sign, and then not carry out their job once you do that.
In a buyer’s market, your agent may not be capable of finding someone who would pay a good price. This is a drawback irrespective of whether you have an open listing, or an exclusive one. An exclusive agent may be able to find a buyer faster, but you may not acquire the price you wanted.
What Happens in Case of Violation?
The individuals to the exclusive agency agreement must acknowledge that violation of this agreement would cause irreparable damage to the non-breaching individual, which is not sufficiently compensable through monetary damages(1). Moreover to other relief, it is settled that the non-breaching individual shall be eligible to seek out injunctive relief from a court of competent jurisdiction towards preventing any actual or susceptible violation of any provisions of the agreement, and the individuals would waive any obligation for the obtaining or posting of any bond with regard to such injunctive relief.
An exclusive agency agreement is an agreement that binds a principal and an agent in an association and limits them to make any identical deals with the other’s rivals. The exclusive agency generally furnishes the terms on which on an exclusive basis, a principal involves an agent.
An exclusive agency agreement may provide the agent with a protection period. This stops the seller from mistreating the agreement for not to pay any commission. This protection period allows the agent to receive the entire commission if the buyer brought modifications to their mind and comes back later, once the agreement has expired.