What Exactly is an Exclusive Right to Sell Agreement?
An Exclusive Right to Sell Agreement is generally a document signed by a Seller of residential real estate which provides the Broker of the Buyer of the property with the "exclusive right" to represent the Buyer in the sale and purchase of that property. If properly drafted, it should also provide for a closing by or within a particular closing date as well as closing costs and transfer tax. It will typically be between 2-5 pages . In the majority of circumstances, it is signed before the Buyer submits a contract to purchase and sale. It can, however, be signed at any time, or alternatively, not signed at all.
In many jurisdictions it is unnecessary, for example, in many states in the American Northeast. In this blog, we will explore what an Exclusive Right to Sell Agreement is, the benefits of an exclusive right to sell agreement, when an exclusive right to sell agreement is typically used, and some alternative forms of an exclusive right to sell agreement.
Essential Elements of the Agreement
The exclusive right to sell agreement serves as a contract between a seller and their real estate agent to execute the sale of a property. While each agreement can be tailored to fit the specific situation, it usually includes a number of specific components. For example, a commission rate is established within the agreement and will indicate how much the agent earns through the successful sale of the home. The listing period is also one of the key components, as this indicates how long the selling contract will last and when the seller can end the agreement if the sale hasn’t gone through. Another important part of the agreement is the duties that are specified. These include what the agent has to do in order to earn their commission, in addition to what they are not obligated to do. A section of the agreement will usually also indicate which obligations, like the marketing of the property or being present for showings, the seller must also meet. It can be difficult to navigate the many different components that come with these agreements, and while forms are available online that are very similar, it’s best to consult the expertise of a real estate attorney to ensure that all interests are protected.
Advantages of Using an Exclusive Right to Sell
One of the major advantages of using an Exclusive Right to Sell Agreement is that it provides real estate agents with a means of ensuring that they are properly compensated for their time and effort spent by making them sole legal representatives of the seller and buyer. One can be assured that their hard work will not go unappreciated, and neither will the commission earned from making a sale.
But for sellers, the agreement will ensure that they get the attention they deserve, with the promise that the agent will dedicate their resources toward selling the property exclusively. Sellers will not have to worry about the property being marketed somewhere else, or that other parties will be making efforts to sell it. It guarantees that there will be one set of eyes on the prize, so to speak.
Additionally, having an agent with an exclusive agreement in place allows sellers to free up their time to focus on other things. The agent is charged with the task of making a sale. A dedicated and hard-working agent is going to be inspired to make that happen, knowing that he or she has a legal and financially obligated duty to ensure the property sells in a timely manner.
Drawbacks of an Exclusive Right to Sell
Though an exclusive right to sale agreement may have many advantages, potential sellers should know that entering into such a contract may also mean you will have to pay a commission even if you find a buyer on your own. It’s a good idea to ask a potential real estate agent about potential drawbacks during the initial consultation process, as you could end up working with someone for an extended period of time who won’t really be able to help you.
You should also be aware that a retainer fee may not be refundable. A retainer fee is one you pay the agent before they start to do any actual work. In the worst case scenario , a real estate agent could charge you the retainer fee and not sell your house, keeping part or all of it as a commission. It’s very important that you read your contract closely, and remember to check what you will be paying for if the agent sells your house. Keep in mind that if you have hired an agent, you are under a contract. You could be in violation of this contract if you do something like try to sell the house yourself or don’t respond to offers, and you could end up being responsible for a substantial sum of money.
How to Download and Use the PDF Template
When preparing to enter into an exclusive right to sell real estate transaction with a seller-client, an agent can save time by downloading a ready-made, reliable, and law-compliant exclusive right to sell agreement PDF for use. PDF agreements can be customized to specific transaction needs by filling out the document’s editable fields on-screen before printing or emailing it. Be sure to check with your state, county, and municipality laws, as there may be laws regarding the length of time of the contract, disclosure information, and agency duties and relationships.
Legality of the Exclusive Right to Sell
The exclusive right to sell agreement is not something that can be simply drafted from a boilerplate document and slapped into play. The legal ramifications of using one are immense, and therefore consultation with legal professionals is needed. This is something you will want to take seriously if you ever find yourself in litigation. The role of real estate attorneys is to help take a raw template and make it your own . They will review the contract in its entirety, even if all you’re having them do is review the clause regarding earnest money deadlines to close. They will make recommendations based on what they think is best for your unique situation, and ultimately your attorney will negotiate new clauses as needed with the buyer’s representative.