Exclusive Agency Agreement: How They Work and Should You Sign One
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What is an Exclusive Agency Agreement?
An Exclusive Agency Agreement is a legal contract between a real estate firm and home seller that grants the firm the right to be the only entity to market and sell a property. In other words, this agreement gives the real estate agent the right to be the only agent to sell the property.
This is different from the exclusive right of sale agreement in which the seller cannot retain the right to market and sell the house without paying a commission. For exclusive agency agreements, the seller still retains the right to market and sell the home without paying a commission to the listing firm or agent, if the seller finds the buyer independently.
Anyone who hires a real estate agent signs an agreement. In case of sellers, it is the exclusive agency listing. In case of buyers, it can be the buyer’s exclusive agency agreement.
Difference Between Exclusive Right and Exclusive Agency
In an exclusive right agreement, the listing agent will receive commission from the seller regardless. After signing this agreement, the seller of the house will also have to pay a commission to the broker if they find a buyer and sell the house.
In an exclusive agency agreement, the seller retains this right. The biggest difference between the exclusive right and exclusive agency is commission. An exclusive agency will not guarantee commission but an exclusive right will.
Here is an article about different types of listing agreements.
How Exclusive Agency Agreements Work
There are key elements in any exclusive agency agreements. Here are some common ones used by firms and agents:
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Exclusivity
:
- Exclusive right to sell : If the agreement is between a seller and a broker, it could include the exclusive right to sell, thereby giving the chosen firm or agent the sole right to sell the property.
- Buyer-broker exclusivity : Buyer-broker exclusivity in an exclusive agency agreement means that a buyer will only work with the firm or agent the buyer chose. The buyer cannot change or look for other firms and agents to work with.
- Term of contract : The term of the contract is the first part of an exclusive agency agreement where length of the contract is outlined. Term could be weeks, months and even years and can be negotiable if you feel that the term is too long or too short. It essentially sets the length of time the real estate firm will have exclusive rights to sell the property.
- Compensation: This lists the amount of compensation the agent will earn if the sale happens. Commission is generally 5-6% of the sale price but is negotiable. The document should clarify that if the seller pays the compensation out of the proceeds of the sale then the buyer is not obligated to pay anything extra.
- Property description in the contract : The agreement should define the property in question. You are only bound to the contract if this description matches the actual property in case you are the buyer. This would also include the type of listing.
- Listing Price : In case of an exclusive agency listing, the document should mention the listing price.
Should You Sign an Exclusive Agency Agreement?
Before deciding if an exclusive agency listing is right for you, you should consider the advantages and disadvantages of the agreement.
Advantages of Exclusive Agency Listings
- Save Money : This type of listing can help you save money. If you find a buyer independently for your home and sell the property, you will not pay any commission to the real estate firm or agent.
- Better Relationships with your Agent : Since an exclusive agency agreement gives the agent the right to exclusively market your property, greater trust is established between you and your agent, which can create a better working relationship.
Disadvantages of Exclusive Agency Listings
- Agent Motivation : If commission is not guaranteed, an agent might not be motivated to market and sell the property as much as if it were. You may also create a sense of security for the listing agent, as opposed to hiring multiple that may work harder to create a sale.
- More work for seller : Since the agent might not be motivated, there would be more work for you, or the seller, to market and sell your home.
You can compare the pros and cons of an exclusive right agreement before deciding which would be the best fit for you. Here are some pros and cons of an exclusive right agreement:
Advantages of Exclusive Right Listings
- Motivated Agent: Since the contract has a fixed term and the agent will earn a commission under an exclusive right to sell agreement, they are more likely to be motivated to find and sell the property.
- Multiple Listing Service: In order to sell the property quickly, the agent is more likely to use multiple listing services to provide exposure.
Image via Pexels by Karolina
Disadvantages of Exclusive Right Listings
- Cancellation policy of the contract: Some contracts do not allow cancellation mid-term. Read through the agreement before signing.
- Pay Commissions Regardless: You may be able to find your own homebuyer but still be required to pay the agent commissions for the sale.
Want to know if an exclusive right listing is a better fit for you? Here is an article comparing the pros and cons of exclusive right listings.
Before signing an exclusive agency, agreement make sure to read thoroughly and ask questions. Do the following before signing an exclusive agency agreement:
- Inquire about a shorter term : If your contract seems too long, you can negotiate the term of the contract.
- Ask for a trial run: Before handing off your house to an agency, you might want to go for a trial run to ensure they are fit to sell your house. You can also ask your firm or agent for a trial run before signing an exclusive agency agreement to ensure you can work well with your firm or agent.
- Read the fine print : You will want to ensure that all clauses are agreed upon in the agreement. If there are provisions and conditions to any services being offered by the firm, be sure to read through them before signing the contract.
You can find templates online to draw up your own exclusive agency agreement. However, it is advised to consult a real estate professional to ensure a smooth deal.
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Scott S.
I specialize in business law and contracts, with an emphasis on commercial transactions and negotiations, document drafting and review, employment, business formation, e-commerce, technology, healthcare, privacy, commercial real estate, data security and compliance. Specifically, I've drafted, reviewed and/or negotiated thousands of MSA's, NDA's, TOS', SAAS, sales, service, managed services, referral, reseller, royalty, finder’s fee, employment, contractor, consulting, advertising, marketing, manufacturing, distribution, management, artist, author, agency, photography, rental, lease, vendor, partnership, website, platform, application, privacy, non-compete, non-circumvent, confidentiality, IP ownership and licensing agreements so I'm very familiar with these types of documents. Practicing law since 2006, I worked in-house before starting my own solo practitioner law firm in 2011. I've worked with individuals and start-ups, Fortune 500 companies, and every type of entity in between, always providing quality legal work that fits the exact needs of the person and/or business. I’m a graduate of the Benjamin Cardozo Law School and also have an English degree from Penn.
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Daehoon P.
Daehoon P.
Corporate, M&A & Securities Lawyer | Managing Attorney, DP Counsel PLLC Practice Areas: Business Formation | Commercial Contracts | Contract Drafting & Review | Mergers & Acquisitions | Venture Capital | Securities Offerings | Franchise Law | Employment & Equity Compensation | Intellectual Property | Cross-Border Transactions About/Bio: I represent companies, investors, and fund sponsors in corporate transactions, commercial contracting, and private securities matters, from entity formation and early-stage financings to acquisitions, exits, and ongoing strategic counsel. As Managing Attorney of DP Counsel PLLC, I help clients structure transactions clearly, allocate risk thoughtfully, and move deals forward with documentation that is practical, enforceable, and aligned with business objectives. My practice includes both day-to-day commercial matters and more complex transactional work, including venture financings, private offerings, M&A deals, fund-related documents, and cross-border structuring. What I Do: Corporate & Commercial • Entity formation and structuring for corporations, LLCs, and limited partnerships • Operating agreements, shareholder agreements, and governance documents • Commercial contract drafting, review, and negotiation • Vendor, distribution, manufacturing, SaaS, and licensing agreements • Employment, consulting, confidentiality, and equity compensation agreements • Outside general counsel support for growing companies Securities & Private Capital • Private offerings under Regulation D and Regulation S • Private placement memoranda, subscription agreements, and investor documents • SAFE, convertible note, and priced equity financings • Venture capital and private fund formation matters • Fund governing documents and offering document packages • Securities law analysis for private capital raising transactions Mergers & Acquisitions • Letters of intent and term sheets • Stock purchase, asset purchase, and merger agreements • Due diligence coordination and transaction support • Disclosure schedules, closing documents, and post-closing matters • Earnouts, rollover equity, indemnity structures, and related deal terms • HSR, CFIUS, and related regulatory issue spotting for qualifying transactions Digital Assets & Emerging Technologies • Federal-law digital asset and token securities analysis • Entity structuring for blockchain and Web3 ventures • Digital asset fund and operating structures • AML/KYC documentation support and regulatory issue spotting Franchising • Franchise Disclosure Documents (FDDs) • Franchise agreements • Master franchise and area development agreements • Franchise structuring and registration coordination Real Estate Transactions • Commercial real estate acquisitions and dispositions • Real estate joint ventures and syndications • Commercial lease drafting and negotiation • Real estate investment structures and related offering documents Cross-Border & International • U.S. market entry and entity structuring for international clients • Delaware and multi-entity holding structures • Cross-border transaction planning and documentation • Coordination with foreign counsel and tax advisors on cross-border matters Why Clients Hire Me: • Big-law-level drafting with boutique responsiveness • Practical, business-focused advice grounded in execution reality • Clear scoping and transparent fee arrangements • Experience across financings, acquisitions, fund formations, and cross-border transactions Typical Projects: • Contract drafting and negotiation • Entity formation and governance packages • Private offering document suites • Venture financing documentation • M&A transactions from LOI through closing • Fractional or outside general counsel support Industries Technology | SaaS | FinTech | Digital Assets | E-commerce | Healthcare | Real Estate | Food & Beverage | Professional Services
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