Exclusive Agency
Definition and meaning of Exclusive Agency in real estate.
An exclusive agency is a listing agreement between a property seller and a real estate broker that grants the broker the sole right to represent the seller. However, the seller retains the right to sell the property independently without owing a commission to the broker.
In more detail
Under this agreement, the broker is motivated to market the property because they are the only agent authorized to sell it. If another real estate agent finds a buyer, the listing broker still receives a commission, which they typically share with the buyer's agent. The unique feature is that if the seller finds a buyer on their own, perhaps a friend or neighbor, no commission is paid to anyone.
This type of listing is less common than an exclusive right to sell agreement because brokers risk spending time and money on marketing without guaranteed compensation.
Key facts
| Category | Buying & Selling |
|---|---|
| Commission rules | Owed only if the listing broker or another agent procures the buyer |
| Also known as | Exclusive agency listing |
| Who benefits | Sellers who want professional help but wish to keep the option to sell privately |
A seller signs an exclusive agency agreement with a broker but ends up selling the house to their cousin who heard about the sale directly from the family, meaning no commission is owed.
Frequently asked questions
What is the difference between exclusive agency and exclusive right to sell?
In an exclusive agency agreement, the seller pays no commission if they find the buyer themselves. In an exclusive right to sell agreement, the broker gets paid regardless of who finds the buyer.
Why do brokers dislike exclusive agency agreements?
Brokers run the risk of investing time and advertising money into listing a home, only to receive no compensation if the seller finds an independent buyer.