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Kacie Goff
Kacie Goff is a personal finance and insurance writer with over seven years of experience covering personal and commercial coverage options. She writes for Bankrate, The Simple Dollar, NextAdvisor, Varo Money, Coverage, Best Credit Cards and more. She's covered a broad range of policy types — including less-talked-about coverages like wrap insurance and E&O — and she specializes in auto, homeowners and life insurance.
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In the digital age, home sellers have more channels to promote their property than ever before. Given these options, signing an exclusive agreement with just one real estate brokerage may seem counterintuitive. However, some instances exist in which the exclusive right to sell a listing can benefit both you and the agent.
For starters, it’s common for established, successful real estate agents to require these agreements. In addition, having an exclusive right to sell in place can motivate your agent to work hard to sell your house before the agreement expires in order to earn their commission. (A recently settled federal lawsuit has triggered changes in the way real estate agent commissions are paid, but home sellers will still be responsible for paying their own agent.)
An exclusive right to sell contract won’t always be the right fit for all home sellers, though. Here are a few considerations to keep in mind.
As its name suggests, this type of agreement gives the agent you choose (and their brokerage — i.e., the company for which they work) the unique, unshared right to obtain a buyer for your home. They also get the exclusive right to list and market it. Once an agreement is in place, all interested buyers (and their agents) have to go through the contracted agent and brokerage.
If your home sells while the agreement is in place, you will be required to pay the agent their commission fee, which is agreed upon in advance. This is true regardless of whether the buyer was actually found by the agent or not (for example, if you found a buyer yourself without the agent’s help).
However, the exact amount of the commission you’ll pay is about to change. For decades, protocol has been for the seller to pay both their own agent’s commission and that of their buyer’s agent. However, thanks to a landmark lawsuit that was settled in March 2024, new rules around real estate commissions are set to go into effect in July. As a result, sellers will no longer automatically be responsible for paying the buyer’s agent — these changes make it especially important to reach an agreement with your listing agent in advance, specifying the exact percentage of the commission to be paid, and to whom.
One big benefit of an exclusive right to sell agreement is its influence over the agent’s focus and motivation. With an exclusive agreement, your listing becomes a priority for them, keeping them highly invested in making the sale happen.
Exclusive right to sell is different from a similar-sounding term, exclusive agency.
With the exclusive right to sell, the agent and their brokerage make a commission no matter who finds the buyer. With an exclusive agency agreement, on the other hand, you retain the right to market and sell your home yourself without paying a commission to the agent. If you end up selling your home to your coworker, for example, and your listing agent was never involved in the process, you would not have to pay their commission.
To earn a commission under an exclusive agency arrangement, the agent and broker may have to do more work to track leads and ensure they are involved in finding the buyer. Because of this, brokerages may not always agree to exclusive agency arrangements. Ultimately, without the incentive of a guaranteed commission, there is less at stake to motivate the involvement of an agent and broker under exclusive agency agreements compared to exclusive right to sell arrangements.
As with any contract, the details matter. Before you commit to an exclusive right to sell agreement, be sure to review the following areas closely:
The big drawback with an exclusive-right-to-sell agreement comes from the guarantee of commission for the agent. Unless you have agreed to an exemption, you will be expected to pay your agent’s commission even if you happen to find a buyer without them. Because the agent has the exclusive right to sell your home, they make their commission regardless of how the buyer came to the closing table.
This type of arrangement also means that if you aren’t happy with the way the agent is marketing your home or the type of buyers they bring you, you might be stuck without recourse. You won’t be able to switch agents or hire another brokerage until the agreement’s duration is up, unless circumstances allow for a specific cancellation option outlined in the contract.
As you would before hiring anyone, do your research first. Verify that the agent and their brokerage are experienced and reputable, ask for references and check out their online reviews. You should also carefully read the contract before you sign it, to make sure you understand all the terms and conditions, from the duration of the agreement to your ability to cancel if you’re dissatisfied. And if you already have a buyer in mind, consider whether you want to ask for an exemption for them — that way, if the sale works out and the agent’s services aren’t needed after all, you won’t be required to pay their commission.
That depends on your agreement. In some cases, you may be able to argue breach of contract if you feel the agent isn’t holding up their end of the agreed-upon contract obligations. You would likely need hard proof to quantify a breach of contract, and may require the assistance or guidance of legal representation.
If an exclusive right to sell agreement expires before the home has been sold, you have a few options. If you still like your agent, you can stick with them and put another agreement in place. If you’d rather find a new agent or to pursue a for-sale-by-owner transaction, now’s your chance to do so. Depending on your circumstances, you might also opt to take your home off the market entirely.
Arrow Right Personal Finance Contributor
Kacie Goff is a personal finance and insurance writer with over seven years of experience covering personal and commercial coverage options. She writes for Bankrate, The Simple Dollar, NextAdvisor, Varo Money, Coverage, Best Credit Cards and more. She's covered a broad range of policy types — including less-talked-about coverages like wrap insurance and E&O — and she specializes in auto, homeowners and life insurance.
