‘Exclusive Right to Sell’ Meaning When You Sell Your House?

In the digital age, homeowners looking to sell their houses have more ways to promote their property than ever. With so many options, signing an exclusive agreement with just one real estate brokerage may seem unnecessary. However, there are situations where the exclusive right to sell can benefit both you and the agent.

 

For example, successful real estate agents often require these agreements. Additionally, having an exclusive right to sell in place can motivate your agent to work harder to sell your house quickly and earn their commission. Even though recent changes in how real estate agent commissions are handled have emerged due to a federal lawsuit, as a home seller, you’ll still be responsible for paying your agent.

 

An exclusive right-to-sell contract may not be the best option if you’re looking to get a cash offer or considering working with companies that say “We buy houses for cash.” 

 

Here are some key points to consider before deciding.

What is an exclusive right to sell a listing?

An “exclusive right to sell” agreement gives the real estate agent and their brokerage the sole authority to sell your house. This means they have the exclusive right to market and list your home to get a cash offer, and all potential buyers and their agents must go through them. If you sell your house while the agreement is active, you’re required to pay the agent’s commission, even if you find a buyer on your own. While this can work well for traditional home sales, it might not be ideal if you’re looking to “sell my house fast for cash”. 

If your goal is to get a cash offer quickly or work with companies that say “We buy houses for cash,” like cashofferoption. , and 99offers.io, a more flexible arrangement may suit your needs better, allowing you to close faster and avoid the commission fees.

Changes in real estate commission structures are on the horizon. Traditionally, when you sell your house, you’ve been responsible for paying both your agent’s commission and the buyer’s agent’s fee. However, a landmark lawsuit settled in March 2024 will alter this, with new rules going into effect in July. Sellers will no longer automatically be responsible for covering the buyer’s agent commission, making it crucial to clarify commission terms with your listing agent upfront. 

 

While an exclusive right-to-sell agreement can ensure your agent stays focused on selling your house, this approach may not be ideal if you aim to “sell my house fast for cash”. If you’re looking to get a cash offer or considering options like companies that “we buy houses for cash,” this exclusive arrangement could slow things down or add extra costs. For a fast, commission-free sale, cash buyers may be a better alternative.

 

 

Exclusive right to sell vs. exclusive agency

The exclusive right to sell and exclusive agency agreements may sound similar but have key differences. 

 

With an exclusive right to sell, your agent and their brokerage earn a commission no matter who finds the buyer, even if you secure the buyer yourself. In contrast, with an exclusive agency agreement, you retain the right to market and sell your house independently. If you find a buyer like a coworker without the agent’s involvement, you won’t owe them any commission.

 

Under an exclusive agency arrangement, agents and brokers often need to work harder to track leads and prove their role in the sale to earn their commission. Because there’s no guaranteed payout, some brokerages may be less inclined to agree to this type of arrangement. If you’re looking to “sell my house fast for cash” or get a cash offer, an exclusive right to sell your house may not be the best fit, as it limits your flexibility. Cash buyers or companies that say “We buy houses for cash” might offer a faster, more straightforward sale without the complications of paying commissions.

 

Details of an exclusive right to sell agreement

As with any contract, the details matter. Before committing to an exclusive right-to-sell agreement, carefully review the following key areas:

 

• Duration: The exclusive right-to-sell clause in the contract you establish with your real estate agent should include an expiration date, typically ranging from 30 days to six months or more. When you sell your house, you don’t want the contract to last too long, as a defined expiration date motivates the agent to work efficiently and sell your house on time.

• Commission: Ensure the commission fee is clearly outlined in the contract when you sell your house. Typically, it will be a specific percentage of your home’s selling price. The contract should also specify whether the commission will be shared between your agent and the buyer’s agent, and if so, what the split is. Starting in July 2024, sellers will no longer be required to cover the buyer’s agent’s commission, though some sellers may still choose to. Just make sure you’re clear on exactly how much you’re paying, and to whom before you commit.
• Cancellation: Your right to cancel the agreement when you sell your house will depend on the terms of the contract you sign. Make sure you thoroughly review the terms and conditions to understand your cancellation rights. You might be able to cancel the agreement if the agent fails to meet the marketing benchmarks specified in the contract, or under other breach-of-contract circumstances. Ensure these rights are clearly outlined in writing before you commit.
• Exemptions: If you have a specific buyer interested in purchasing your home, but you still choose to hire an agent for additional support, you can include that buyer as an exemption in the contract. By naming this individual in the agreement, you ensure that you won’t have to pay the listing agent’s commission if you sell your house to that person, even under an exclusive right-to-sell agreement. This way, you protect yourself from having to compensate the agent for a sale that you facilitated independently.

 

Drawbacks of selling this way

Here’s another way to outline the drawbacks of selling with an exclusive-right-to-sell agreement:

• Commission Obligations: You’ll owe the agent their commission regardless of how the buyer is found. If you sell your house to someone you found independently, you’ll still have to pay the agent unless you have specified exemptions.
• Less Selling Flexibility: This agreement ties you to the agent and their brokerage, potentially limiting your options if you want to explore faster selling methods, such as receiving a cash offer or working with companies that say “We buy houses for cash.”
• Agent Dependence: If you’re unhappy with the agent’s marketing strategy or the types of buyers they’re attracting, you may be stuck with them until the agreement expires. Changing agents or brokerages is typically not possible until the contract term ends unless there’s a cancellation clause.
• Potential for Dispute: If the agent’s efforts do not meet your expectations or the house doesn’t sell, you might find it challenging to address issues or terminate the agreement before the contract’s expiration.

 

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FAQs

What should I consider before signing an exclusive agreement?

Before signing an exclusive agreement, take these important steps:

• Conduct Thorough Research: Verify the agent’s and brokerage’s experience and reputation. Check online reviews, ask for references, and ensure they have a solid track record.
• Read the Contract Carefully: Examine the contract in detail to understand all terms and conditions, including the agreement’s duration, commission structure, and cancellation policies. Make sure you’re clear on what happens if you’re unhappy with the agent’s performance.
• Consider Buyer Exemptions: If you already have a potential buyer, think about requesting an exemption for them in the agreement. This way, if the sale goes through with your buyer, you won’t have to pay the agent’s commission if their services are not needed.

 

Can you back out of an exclusive right-to-sell agreement?

Yes, you can back out of an exclusive right-to-sell agreement, but it depends on the contract terms. Check for a cancellation clause, which outlines the conditions for terminating the agreement. If the agent breaches the contract or fails to meet their obligations, you might have grounds for cancellation. Alternatively, you could negotiate a release with the agent or seek legal advice for guidance.

 

What happens if the agreement expires? 

If an exclusive right-to-sell agreement expires before the home has been sold, you have a few options. If you still like your agent, you can stick with them and put another agreement in place. If you’d rather find a new agent or pursue a for-sale-by-owner transaction, now’s your chance to do so. Depending on your circumstances, you might also opt to take your home off the market entirely.

 

Who receives the commission under an exclusive right-to-sell agreement?

An exclusive right-to-sell listing agreement is a contract between a listing agent and a home or property owner. An exclusive right to sell specifies that the listing agent is the only agent you’ve hired, and the agent is guaranteed to receive the commission when your house sells.