Exclusive right to sell listing agreement: Definition & key details

It’s crucial to use a real estate agent throughout the home selling process. In fact, 89% of sellers used an agent in 2023, according to The National Association of REALTORS^Ⓡ (NAR) Profile of Buyers And Sellers. A listing agent, or seller’s agent, helps price a home, market it and get sellers the best deal possible.

But did you know you have a few listing agreement options available when selling with an agent? One of these agreements is called “exclusive right to sell.” Below, we’ll specify what an exclusive right to sell listing agreement means, the key components sellers should know and how it compares to other types of agreements.

What does exclusive right to sell mean?

An exclusive right to sell listing agreement is a contract with a real estate agent or broker that gives them exclusive rights to sell and market your home. Under this listing agreement, you can’t hire another broker or agent while your agreement is in place.

The exclusive right to sell agreement requires the seller to pay the real estate agent a commission regardless of who ends up selling the property, as long as the agreement is in effect.

Exclusive right to sell listings are allowed on the multiple listing service (MLS). Usually, that’s where you’ll find them. If you’re selling your home, you’ll want it to be on the MLS to find the most buyers.

Exclusive right to sell vs. exclusive agency listing

An exclusive agency agreement is a contractual agreement where the listing broker acts as the agent, or the legal representative of the seller. Under this agreement, the seller must agree to pay a commission fee to the broker if they sell the property.

Based on the terms of each agreement, the biggest difference between an exclusive right to sell and an exclusive agency agreement is who pays the REALTOR^® fees. Under an exclusive right to sell agreement, the seller is responsible for paying the REALTOR^® fees regardless of whether they or the owners sell the property. Under an exclusive agency listing, however, the seller only pays the fees if the agent sells the property.

Under exclusive agency agreements, the broker does not receive a commission if the seller is the one to find a buyer for their property.

There is also a ton of monitoring required from the broker’s end when it comes to an exclusive agency listing.

The broker will have to manage things like contact with other brokers and buyers to make sure it’s clear the sale of the home happened with their help.

Unlike an exclusive right to sell, the exclusive agency also puts an agent at financial risk if they expend a lot of resources to sell a home, and they end up not getting paid for any of it.

This fact alone is the reason most agents won’t agree to an exclusive agency agreement.

Important details of the exclusive right to sell agreement

Before you sign an exclusive right to sell agreement with your agent, there are a few more terms you need to discuss and specify in your contract.

Duration of the agreement

You must know how long your exclusive right to sell agreement is contracted to last. If you sell your own home (without the agent), you could still be on the hook for their commission.

As long as your exclusive right to sell agreement is in place, the agent will get their commission. However, if they’re unable to find you a buyer before the contract is up, and you’ve found your own buyer, you won’t have to pay the commission.

Financial obligations

Outside of the agent’s commission, you must also consider the other potential costs of selling your house. Examples may include renovations you make on the house before listing it, paying for capital gains tax (or other taxes), closing costs or even fulfilling any components of a contingent offer.

An agent could use their experience to save you money. This is especially true when it comes to negotiating seller concessions or other contractual contingencies that can save you on home buying fees such as closing costs.

Contract cancellation rights

Before you sign, you should also lay out any cancellation rights. If your agent isn’t abiding by the terms of your contract, or they breach that contract, it may be best to cancel it. But you may only be able to opt out of your exclusive right to sell agreement if you included this condition in your initial contract.

Alternatives to exclusive right to sell listing agreements

If an exclusive right to sell listing or an exclusive agency listing doesn’t quite fit what you need, there are a few other options for listing your property.

Open listing

Open listings mostly benefit the home buyer. Unlike an exclusive right to sell listing, an open listing allows the owner to place listings with multiple real estate brokers. On top of that, the homeowner can still sell the home themselves and avoid paying any agent commission. You also won’t find an open listing on the MLS. Instead, sellers rely on the real estate brokers to bring them a buyer.

You’ll probably find it hard to get an agent to agree to this type of listing since they work on commission.

Net listing

Net listings allow a real estate agent to keep the difference between what the homeowner wants to sell the home for and the actual sales price. Unlike exclusive right to sell listings, where your commission rate is set, net listings can be a gamble for the agent.

For example, let’s say you go into a net listing with an agent, and both of you agree that you want to sell the house for at least $332,000. That would be the base price. Anything above that sales price, the real estate agent gets to keep.

If they sell the house for $372,000, then their commission would be $40,000. On the opposite end, if they sell the home for $334,000, their commission would only be $2,000.

This is probably one of the most complicated listings available because it could end badly for both the seller and the broker. You probably won’t see this listing much because it’s illegal in several states. Even in the states where it’s legal, there are many restrictions.

Multiple listing

This listing gets your property featured in the multiple listing service (MLS), and usually, that’s it.

The MLS is a tool used by almost every real estate agent to find properties for their buyers – think of it as Google, but specifically for finding houses for sale. You’ll find that most of the exclusive agency listings and right to sell listings are on the MLS. Know that if you don’t work with an agent, you’ll have to pay a fee to place your listing on the MLS.

FAQs about exclusive right to sell listing agreements

Now, let’s learn more about exclusive right to sell listing agreements by referencing these frequently asked questions.

What is the typical length of term for an exclusive right to sell agreement?

An exclusive right to sell listing agreement can be as short as 30 – 90 days, or it can run several months to a year. The duration depends on the timeline you and your agent agree upon when writing up your contract.

What happens after an exclusive right to sell agreement is signed?

Once the contract is signed, your agent or broker will list your home on the MLS and begin to seek out buyers for the designated duration of the contract.

What happens once the exclusive right to sell agreement expires?

When an exclusive right to sell agreement expires, you can renew the contract with your current agent or write up a new contract with a different agent. You may also consider alternative types of listing agreements if exclusive right to sell wasn’t the right fit, such as an open listing or FSBO.

The bottom line

If you want an agent to put in the work and make selling your home much more comfortable, the exclusive right to sell listing is likely your best option. If you choose this type of agreement, be sure to protect yourself by clearly laying out all contract details before signing. Then, let your trusted agent do what they do best.

Contact a Rocket Homes^SM Partner Agent to help you make the right choices as you list your property.