What is the minimum time limit for employment in an exclusive listing agreement?

After selecting an agent to list your home, one key negotiable factor to discuss before you sign the listing agreement is to determine the length of the listing contract.

The length of your listing is your decision; it is not your agent's decision. Your agent may suggest a time period, but it is up to you to choose the length that works best for you. You have the final word.

Key Takeaways

• When you list your home with an agent, you can choose 30 days, 90 days, 180 days, or longer.
• The number of days you choose should coincide with the average number of days homes take to sell in your area at that time.
• Property types that cater to specific clients also have different marketing lengths and costs.

Reasons for a 30-Day Listing Length of Time

If the market is steaming hot and homes are flying into pending status within days, your agent might be agreeable to a 30-day listing. This way, if every other home on your street is selling within three weeks, and yours is still sitting without an offer on day 29, you can easily get rid of your agent and hire somebody else.

Before you refuse to relist with your agent, though, first look at your price. If it is too high, no agent is going to sell it.

Reasons for a 90-Day Listing Length of Time

In normal markets, 90-day listings are more common. During the first 30 days, you should get a lot of showings if your house is priced right.

Ask your agent for buyer feedback, and follow up on suggestions to improve the condition of your home and/or price.

Reasons for a 180-Day Listing Length of Time

If the average DOM (days on market) exceeds two months, you're probably trying to sell in a buyer's market, and you will need a longer listing term.

If you go into contract on a 90-day listing, it might expire while in escrow. In that event, your agent might require you extend the listing, so it makes more sense to start out with a 180-day listing.

Ask your agent when you initially sign the six-month listing whether they will give you a personal guarantee that you can cancel at the end of 90 days if you are unhappy. If the agent won't give you that guarantee, then list with an agent who has more confidence to make you that offer.

Reasons for a One-Year Listing Length of Time

If you live in a rural area where nothing ever sells in less than one year, a 360-day listing may be the norm in your area. Unique properties, large parcels, and expensive estates might take longer to sell, because they might appeal to a more limited number of buyers.

Private islands and lavish vacation homes require a longer marketing time, and agents may not be willing to shell out the big marketing bucks for a short-term listing.

Let's not forget the short sales and distressed situations. Over the years, banks have improved their response times on short sales, but many still require three months or longer to negotiate. Buyers who walk out prior to acceptance simply lengthen the time frame.

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 retains 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 one 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 less offers and you're more likely to have a potential conflict-of-interest with your agent.

Pocket Listings In Real Estate

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 is not 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

This 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.

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 if the property is sold.

Pros and Cons of Exclusive Listings

Benefits of Exclusive Listings

With an exclusive listing, you are more likely to develop a longer-term working relationship with a single real estate agent. As this agent is the only party responsible for the sale of your property, you may experience that the agent is more motivated to execute the sale as opposed to open listings.

As you develop a relationship with your exclusive real estate agent, they are more likely to make strategic recommendations such as marketing, advertising, and renovation approaches to attract higher offers.

An exclusive listing also gives the seller an opportunity to test the market with fewer future consequences of price changes. If your property is openly listed on the MLS, the general public will know your initial asking price and will see it every time you change this asking bid. For an exclusively listed price, your agent can control who has access to pricing information. There is less risk of potential buyers seeing you've previously reduced the price and using this to their advantage when negotiating.

Exclusive listings are more suitable for sellers that want to control who and how many people are going in and out of their homes during the sale of property. To weed out non-competitive house seekers, sellers can focus on only qualified buyers that are serious about submitting bids by restricting who has an incentive to sell your property.

As exclusive listings offer a certain level of privacy to a seller, celebrities and notable public figures often exclusively list their properties and rely on a real estate agent within their network.

Downsides of Exclusive Listings

Exclusive listings often have 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.

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 is not publicly listed. Without an MLS listing, your property will simply garner less attention as your offering is restricted to your real estate agent's direct network reach.

Exclusive listings are also 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 the information available for other sellers.

There is also a higher chance of a conflict of interest arising due to using an exclusive agent. If that 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 that is knowingly communicating and representing the buyer as well.

Exclusive Listings

Pros

• More likely to develop long-term working relationship with a single real estate agent

• More likely to receive strategic advice from agent who has more knowledge of property

• Can test market by setting non-public price that can easily change with minimal impact

• Grants seller greater privacy and control over who enters home during sale process

Cons

• May result in more complicated fee structures

• Often results in lower exposure than open listings, leading to potentially slower sales

• May not receive accurate information regarding your home due to restricting information

• More likely to result in conflict of interest with agent who often ends up representing buyer in exclusive listing deals

Special Considerations

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 circumstances 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 should a deal progress but eventually fall 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 less 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?

Home exclusively listed often takes longer to sell due to there being fewer eyes on the deal. 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 have 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 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 only work 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.

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