How An Exclusive Contract With a Real Estate Agent Works
If you are selling a house, your real estate agent might ask you to sign an exclusive listing. If you are getting asked to sign an exclusive contract with a real estate agent, you might be wondering what this means.
Is this something you should sign? This exclusive contract might be right for some people; however, it is not going to be right for everyone. Therefore, you should weigh the benefits and drawbacks of this real estate listing agreement before deciding if this is the right move for you.
What Is an Exclusive Listing Agreement?
If you sign an exclusive listing with a specific agent, you are agreeing to work with that specific agent for a predetermined period of time. While this timeframe could be anything, it usually falls between 30 and 90 days. You are giving that listing agent or buyer’s agent the exclusive right to work with you. If you do not buy or sell a home in that period of time, then you can either choose to extend the contract or work with a different agent.
It can be complicated to work with multiple agents at the same time; however, many buyers and sellers will evaluate their agents in a matter of days. If they don’t like the relationship, they may switch and go somewhere else.
An exclusive buyer’s agent represents buyers while an exclusive listing agent usually represents sellers. This exclusive agency listing gives the agent a better shot to meet the needs of the client without having to worry that they might lose that listing. Why would a client sign this exclusive contract with a real estate agent?
Why Should You Sign an Exclusive Agency Agreement with a Broker?
Your agent wants to know that they will be paid if you purchase a property that the agent has spent time and energy showing you. Therefore, they may ask you to sign a real estate agency agreement guaranteeing the agency the exclusive right to your commission if you purchase a house.
One of the biggest reasons why you should sign a buyer agency agreement is that the real estate agent knows that they will get their commission if you sign a contract. Therefore, the real estate agent is more likely to work harder on your behalf to find the perfect house for you. If you sign this buyer’s agent agreement, a few ways your agent might go the extra mile include:
- Talking to a seller’s agent to see if there is a pocket listing in the office that could be perfect for you
- Digging deeper in public records to provide you with extra information on certain homes that you might use to make a decision
- Talking to other Realtors and agents to make sure you have all the information available if you are negotiating on a specific offer with a seller
Purchasing a house is a major financial decision. Even though it is impossible to remove emotions from this decision entirely, you need to have an agent who will advocate on your behalf. That is why you might want to sign an exclusive buyer broker agreement. If you have an exclusive agent, he or she might work harder to find the perfect house for you at the best price possible.
In addition, if you sign an exclusive buyer agency agreement, you also have some clarity on when your agreement with the broker might end. When the exclusive agreement ends, you can either decide to renew that relationship with the brokerage agent or decide to go somewhere else.
How Can You Find a Good Agent for a Buyer?
If you are trying to find a good buyer agency, you may not know where to start. Of course, you need to find someone with a great knowledge of the local real estate market; however, a lot of this comes down to trial and error.
A referral is usually the best way to find a strong agent, so you might want to talk to a few family members, friends, and coworkers. If you are moving to a new area, you might not know where to start.
If you are trying to find a strong listing broker or buyer’s agent, the most important thing to do is to talk to the agent before you sign a buyer’s agent agreement for exclusive authorization.
You need to make sure that your personalities match. You might have the best agent in the world; however, if you do not communicate well, your agent is going to have a difficult time meeting your needs.
If you take a look at a few local listings, you might see an open house taking place. This is a great opportunity to meet a few agents quickly to see if there is one you like. You might run into some dual agency Realtors; however, this is a good starting place.
If you have a lender you are using, you might ask the lender to refer you to an agent in the local area. This is a great way to meet with a few agents.
It is important not to sign an exclusive buyer’s agent until you know who you want to work with. If you sign this agreement, you could be locked into this agreement for a few months.
Your Buyer Broker Agreement Should Go Both Ways
If you are signing a buyer representation agreement, you need to make sure this agreement goes both ways. You should understand your own rights in the agreement and understand the duties of the agent.
You might want to have the right to break the exclusive contract with a real estate agent early if the agent doesn’t perform well. However, you need to be clear about what those standards are. You need to see how long the contract will last as well. Is the contract automatically going to end in three months? Or, will the contract automatically renew at that time?
Even though there is some standard language in these agreements, you need to know what the terms and conditions are. You also need to know the duties of the agent. This is important for holding your agent accountable. You need to take a close look at the fine print so you know exactly what you are getting into.
If you have any questions about the contract, you should speak with an attorney who can help you clarify what you are signing. Do not make assumptions about the contract.
Most importantly, do not work with another agent during this time. If you purchase a house with another agent, you might end up owing multiple commissions if you have signed multiple agreements.
Do You Need To Negotiate This Contract?
It is unlikely that you will need to do much negotiating; however, you want to make sure there is nothing unusual in the contract. Most agents will request an agreement for 90 days; however, you can ask for any terms you want. If you want the term to be 30 days, ask for it and see if you can get it.
You should specify the area within which you want the property to be. If you are unsure of exactly where you want to live, ask the agent for input.
If the contract specifies properties within a certain area, you might be free to use other agents to help you find properties in other locations; however, this is something you want to clarify with an attorney before making this assumption.
You might also want to specify a certain price range. If there is a home outside that price range, this could free you up to work with another agent. If you have a request you want to make, then ask for it. Finally, make sure that both parties sign the contract. This will make it legally binding.
Think Carefully Before Signing an Exclusive Contract with an Agent
Ultimately, there is a lot to think about whether you are signing an exclusive buyer’s agreement or a non-exclusive listing agreement.
Property is expensive, and the stakes are high. Therefore, you need to take the time to find an agent you trust. Then, work with that agent closely and think carefully before signing a commitment.
Once you sign this exclusive contract with a real estate agent, you could be locked in for several months You need to find an experienced agent who communicates well with you.
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