Exclusive (Agency) Listing

Overview

An exclusive (agency) listing is a type of real estate listing arrangement in which a property owner contracts with a single brokerage firm to act as the estate agent in the sale of the property. During the listing period, only the contracted agency may earn a commission from the sale of the property, except if the owner successfully sells the property on their own without the agency’s involvement.

Examples

Residential Property Sale:
- Example: Julia lists her home with Bright Homes Realty using an exclusive (agency) listing. This means Bright Homes Realty is the only brokerage that can earn a commission on the sale if they find the buyer. However, if Julia finds a buyer herself, she doesn’t have to pay any commission to Bright Homes Realty.
Commercial Property Sale:
- Example: ABC Corporation gives an exclusive (agency) listing to Axis Real Estate for selling their office building. If Axis Real Estate finds a buyer, they receive the commission. But, if ABC Corporation themselves find a buyer during the listing period, no commission is paid.

Frequently Asked Questions

Q: What differentiates an exclusive (agency) listing from an exclusive right-to-sell listing? A: In an exclusive right-to-sell listing, the broker earns a commission regardless of who sells the property, even if the owner finds the buyer. In an exclusive (agency) listing, the owner retains the right to sell the property independently without owing a commission.

Q: Is an exclusive (agency) listing suitable for all property types? A: While it can be used for a variety of property types, it is particularly beneficial for owners who believe they can also market their property effectively on their own.

Q: What are the advantages of an exclusive (agency) listing? A: It provides professional marketing and sales service from a brokerage while still allowing the owner the flexibility to sell independently without paying a commission.

Q: What happens if the owner sells the property but the buyer was previously shown the property by the broker? A: If the broker can demonstrate that the buyer was procured through their efforts during the listing period, the broker may still be entitled to a commission.

Brokerage Firm: A company licensed to oversee or conduct transactions between buyers and sellers of real estate for a commission.
Listing Agreement: A legally binding contract between an owner and a real estate broker granting the broker the right to market the property.
Commission: The fee paid to a broker or an agent for services rendered, typically calculated as a percentage of the property’s sale price.
Exclusive Right-to-Sell Listing: A type of listing agreement where the broker is guaranteed a commission regardless of who sells the property within the listing period.
Open Listing: A non-exclusive agreement in which multiple agents can sell the property, and only the agent who finds the buyer receives the commission.

Online Resources

National Association of Realtors - Provides resources, education, and guidance for real estate professionals including information about listing agreements.
Real Estate Buyer’s Agent Council (REBAC) - Offers information and resources specifically for buyer’s agents but also covers different listing agreements.
Redfin Learning Center - Offers articles and guides on various real estate topics including types of listings.
Zillow Seller’s Guide - Offers a section on listing agreements and what sellers should know.

References

“Modern Real Estate Practice” by Fillmore W. Galaty, Wellington J. Allaway, and Robert C. Kyle.
“Your First Home: The Proven Path to Home Ownership” by Gary Keller.
Investopedia - Exclusive Agency Listing - Provides an in-depth explanation of exclusive listing terms.

Suggested Books for Further Studies

“Real Estate Licensing Exams with Online Digital Flashcards” by Jack P. Friedman.
“The Book on Rental Property Investing” by Brandon Turner.
“The Millionaire Real Estate Agent” by Gary Keller.

Real Estate Basics: Exclusive (Agency) Listing Fundamentals Quiz

### What is an exclusive (agency) listing? - [x] A contract giving a single brokerage firm the right to sell the property while allowing the owner to sell independently without paying a commission. - [ ] A contract that permits multiple brokers to sell a property and only the one who finds the buyer earns the commission. - [ ] A contract giving a single brokerage firm exclusive rights where they always earn the commission regardless of who sells the property. - [ ] A temporary listing agreement between a broker and a seller that lasts no longer than a month. > **Explanation:** An exclusive (agency) listing allows a single brokerage firm to earn a commission only if they sell the property, while also allowing the owner to sell the property independently without owing any commission. ### What happens if the owner sells the property themselves under an exclusive (agency) listing? - [ ] The owner must pay half the commission. - [ ] The commission is shared between the owner and the broker. - [ ] The commission goes to the second agent. - [x] No commission needs to be paid to the broker. > **Explanation:** Under an exclusive (agency) listing, if the owner successfully sells the property themselves without the brokerage's involvement, they are not required to pay the commission. ### What must an owner do to avoid paying a commission under an exclusive (agency) listing? - [ ] Sell the property themselves. - [x] Sell the property themselves without using the agency. - [ ] Use the same broker for purchasing the next property. - [ ] Wait for the listing period to end. > **Explanation:** To avoid paying a commission under an exclusive (agency) listing, the owner must sell the property on their own, independent of the broker’s efforts. ### What could be a disadvantage of an exclusive (agency) listing for the owner? - [ ] Limited marketing and exposure. - [ ] Paying double the commission standards. - [x] Risk of conflict over who procured the buyer. - [ ] No access to brokers. > **Explanation:** An exclusive (agency) listing could lead to disputes about whether the buyer was procured by the owner's or the broker's efforts, impacting commission entitlements. ### How does an exclusive (agency) listing benefit the broker? - [x] The broker is motivated to market the property more aggressively. - [ ] The broker can sell the property for a higher commission. - [ ] The broker receives monthly fees regardless of sale. - [ ] Multiple brokers can collaborate. > **Explanation:** The broker knows that they are the only agent entitled to a commission if a property is sold (barring the owner's independent sale), which incentivizes aggressive marketing and efforts to find buyers. ### On what condition can the owner avoid paying a commission in an exclusive (agency) listing agreement? - [ ] Must use another brokerage firm. - [ ] Must sell below market value. - [x] Must sell the property without the assistance of any broker. - [ ] List the property in multiple brokerage firms. > **Explanation:** The owner can avoid paying a commission if they manage to sell the property independently without the assistance or involvement of the contracted brokerage firm. ### Can other brokerage firms be involved in the sale under an exclusive (agency) listing? - [ ] Yes, any brokerage firm can sell and earn commission. - [x] No, only the contracted brokerage firm, unless the owner sells it independently. - [ ] Yes, but only if they split the commission. - [ ] No, it becomes an open listing. > **Explanation:** Only the contracted brokerage firm is involved and eligible for the commission. If the owner sells the property independently, no brokerage firm earns a commission. ### Which of the following best describes an exclusive (agency) listing? - [ ] A simultaneous agreement with multiple brokers. - [x] A listing agreement with one broker with owner seller rights. - [ ] A time-bound agreement with no commission rules. - [ ] A listing that ensures brokers receive commission regardless. > **Explanation:** An exclusive (agency) listing involves just one broker and allows the owner the right to sell the property without owing any commission if they do so without the broker's help. ### Why might a property owner choose an exclusive (agency) listing over an exclusive right-to-sell listing? - [ ] To allow flexibility with property pricing tactics. - [ ] To attract multiple agents for better marketing. - [x] To maintain the ability to sell independently without commission obligations. - [ ] To speed up the listing period. > **Explanation:** A property owner may choose an exclusive (agency) listing to maintain the freedom to sell the property by themselves and avoid paying commission to the broker. ### Which aspect determines if a commission is paid under an exclusive (agency) listing? - [ ] Length of the listing period. - [ ] The buying power of the buyer. - [ ] The final sale price of the home. - [x] The party that procures the buyer. > **Explanation:** Under an exclusive (agency) listing, whether a commission is paid primarily depends on who procured the buyer – the broker or the owner independently.