An exclusive listing is a type of real property listing agreement that allows a seller to appoint and authorize one broker to be the sole agent for the seller. In contrast, an open listing (or non-exclusive) allows the seller to retain the right to hire any number of agents.

How Does An Exclusive Listing Work?

A listing agreement is a legal document that specifies the circumstances under which a broker is authorized to locate a buyer for a property on behalf of the owner. This service comes with the owner paying a commission fee.

It's useful to start with open listings to understand the workings of an exclusive listing. Open listings allow the seller to retain the right to hire multiple agents. Only the broker who succeeds in finding a buyer is entitled to a commission. The seller does not have to pay any commission if they find a buyer on his own.

Exclusive listings work differently. Exclusive listings allow only one broker to be the sole agent for the seller. Only one broker can market, show, and sell the property. Other brokers cannot sell the property during the agreement's active phase.

Types Of Exclusive Listings

Exclusive Agency Listing

Only one broker may act as the seller's sole representative. The broker is not required to be involved in the sale of the property since the seller has the right to do so. However, the seller is obligated to pay the broker a fee if the broker is responsible for bringing about the transaction.

Exclusive Right-to-Sell Listing

This is the most common real estate contract. This listing agreement allows one broker to act as the sole agent for the seller and is the only authorized to represent the property. The listing agreement remains in effect, and the broker still receives a commission, regardless of who sells the property.

Benefits

Exclusive listings are more likely to result in a long-term relationship with one real estate agent. The agent will be the sole person responsible for selling your property. This may make it more difficult to sell than open listings. Your exclusive agent will be more inclined to make strategic recommendations, such as advertising, marketing, and renovation strategies, to help you attract higher offers.

A seller can also test the market by listing only their property, which allows them to avoid future price changes. The general public can see your original asking price and change it whenever you post it on the MLS. Your agent can limit who can access pricing information for an exclusive price. Potential buyers won't be able to see that you have previously reduced the price and then use this information to their advantage in negotiations.

Sellers who want to limit the number of people entering their property during the sale of it will be more comfortable with exclusive listings. Sellers can limit the number of potential buyers to ensure that they only accept qualified bidders.

Downsides

Many exclusive listings have higher fees than open listings. Although some agents charge lower commissions, others may charge higher fees and include/exclude certain benefits. Exclusive listings are not the best way to sell your property quickly. Because the listing isn't publicly available, exclusive listings are not widely visible. Your property won't be seen as much if it doesn't have an MLS listing.

It is also controversial to list your property only once. Open listings are controversial because they reduce competition in the area, impact the accuracy of home prices potential buyers might see, and negatively affect the information available to other sellers. Exclusive agents are more likely to create conflicts of interest. A single agent may be responsible for finding buyers. The buyer might then choose to use the exclusive agent. Although both the buyers and agents would be subject to a fiduciary obligation, it can be difficult to communicate and voice your concerns with an agent representing the buyer.

Why Should You Consider Listing Home Exclusively?

Your house will be listed more privately, and you will have more control over the pricing if you choose an exclusive listing. You'll have to deal with fewer agents, and you'll have control over who may view your property—something that might be particularly useful for properties undergoing significant repair or development.

Special Considerations

A pocket listing is also known as an exclusive listing. Consider the length of the agreement when you sign an exclusive listing agreement with one real estate agent. You may not have to pay a commission if they cannot find buyers within the agreed time frame. Ensure your exclusive listing agreement includes details about what to do during unforeseen circumstances. You or the buyer might not meet certain approval conditions. If a deal falls through, you need to understand the financial consequences.