Exclusive Agency Agreement: Should You Get Into This?

If you have been trying to sell your property recently, you must have come across the concept or the idea of an exclusive agency agreement.

This is a contract type that is popular among others in the real estate property-selling market. Signed between the property owner and the real estate agent or broker, this contract or agreement gives the owner some power over their property.

However, I know how confusing it can be to understand the processes related to the real estate market. Especially when it has anything to do with legality.

That brings me to the point of this article: what is an exclusive agency agreement? And, most importantly, should you get into this contract to sell your property? Also, is it better than Exclusive Right to Sell contracts?

If this is something that you want to know, then you have reached the right place. So, keep on reading this blog till the end, and thank me later…

What is an Exclusive Agency Agreement?

When it comes to real estate and the entire process of listing your property, there are several types of contracts that exist. These contracts determine and explain the roles and responsibilities of the property owner as well as the real estate agent.

One of these contracts is the Exclusive Agency agreement. So, let me tell you what it s exactly in a little detail.

An Exclusive Agency is a legally binding contract. It is signed between the property owner (the seller of the property) and the real estate agent (or a broker).

According to this agreement, the estate agent has the complete right to represent the property owner throughout the selling process. He or she can do anything to find a buyer.

Suppose the agent is able to sell the property successfully and get a deal that is good enough for the owner. In that case, the agent will be able to get the commission that they have agreed upon.

However, there’s something that sets apart this form of contract from others. What’s that? Well, if the owner finds the buyer for the property, they do not have to pay the agent a commission.

This type of arrangement between the owner of the property and the agent gives several benefits to both parties. However, is this something that you should choose for selling your house? 

Advantages of Exclusive Agency Agreement

There are several ways in which this form of a contract is a better option for property owners who are trying to sell their properties. Here are some of the advantages of an exclusive agency contract:

1. Motivates the Agent to Sell: Considering the fact that the agent gets a lot of rights over the sale process of the property, they feel a lot motivated to bring a buyer so that they can get the commission.
2. Saves Money for the Seller: It is a great way in which the seller (property owner) can save some money as they don’t have to give a commission to the agent if they are able to bring the buyer themselves.
3. Increases Property Exposure: You do not have to take care of the marketing and selling process of your property. This is because the real estate agent also brings their experience in the entire process. 
4. Gives the Seller Some Control: Finally, it does not leave the property owners with less power. Unlike in the case of an Exclusive Right to Sell Agreement, the owner still has the right and freedom to find the buyer.

Disadvantages of Exclusive Agency Agreement

While this agreement has its perks, there are also some downsides. Here are some of them that you need to keep in mind:

1. Agent Might Not Work as Hard: Firstly, even though you get an agent, their dedication is much less in this form of a selling process. This is mainly because they do not have a guaranteed commission.
2. Potential Disputes Over Buyers: In case both parties (owner and agent) bring in the buyer of their choice at the same time, there can be a dispute. These disagreements over who found a buyer can make the process less smooth.
3. Longer Selling Time: Unlike in the case of an Exclusive Right to Sell, which gives the agent more power and control over the selling of a property, the dedication to close the deal is lesser in this case. This makes the entire process more time taking.

What Should an Exclusive Agency Agreement Have?

When it comes to creating the Exclusive Agency Agreement, there are a few things that that contract must have. Some of them are as follows:

1. Names and Contact Information

First and most important, the contract should have the legal names of the parties. This means it should have the legal names of the property owner(s) and the real estate agent. Additionally, it should also have their contact details, like address and phone numbers.

2. Property Details

Secondly, the contract should include all the necessary details about the property. For instance, you should include the address of the property.

Apart from that, you can also include details about any or all the features of the property that you need to mention.

3. Agreement Duration

Third, the contract should include the duration for which it will be valid. The starting date and the ending date of the contract are some of the most important things that you should have on the document.

4. Commission Terms

This is probably one of the most important things that sets this apart from other contracts.

The contract should include the percentage of commission that the agent will get if he or she brings the buyer.

It should also explain that the agent won’t get a commission if the owner brings the buyer for the property.

5. Marketing Strategies

The contract should mention all the strategies and plans that the agent has for marketing and selling the property.

For instance, these include the methods they will be using to sell the property. Things like marketing, online listings, open houses, and others are some of these things.

6. Cancellation Terms

Finally, your contract should explain all the terms of the cancellation in case either of the parties decides to end the contract before time.

Your Exclusive Right About Real Estate Agency Agreements

In conclusion, when it comes to choosing the right agreement for selling your property, it all depends on the goals that the seller has. For instance, the owner of the property is able to save a lot of time and energy when it comes to the exclusive agency agreement.

Additionally, if you (by chance) are able to find a buyer yourself, you are also able to save that amount of commission money by not giving it to the agent.

However, irrespective of whichever agreement you decide on, it is best that you read the contracts before you get into one.

Considering the fact that these contracts are legally binding, not understanding the terms of the contract while you sign them can get you into trouble.

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