Selling Investment PropertyWhat Is an Exclusive Right to Sell? Should You Use It? by Mira Teneff March 4, 2020February 19, 2020 by Mira Teneff March 4, 2020February 19, 2020When you sell your house and work with a real estate agent to list your home for sale, you have to set some contractual obligations for both parties – seller and agent – to make sure your residential real estate listing attracts buyers and the deal goes smoothly. This contract is called a real estate listing agreement.There are three types of listing agreements: open listing, exclusive right to sell listing, and exclusive agency. Here, we will discuss the differences between them and the pros and cons of granting exclusive right to sell to your real estate agent.What Is Exclusive Right to Sell?The exclusive right to sell definition given by Investopedia is:An exclusive listing is a real estate sale agreement in which a specified real estate agent stands to gain a commission if a property sells within a specified number of months.An exclusive right to sell agreement means your real estate agent will be the only one selling your home. It usually is limited to an agreed period, ranging from 30 days in hot real estate markets to up to a year for off-market real estate. It is very important to put a clause about the cancellation of the exclusive right to sell agreement in the contract. This will give you the legal right to turn to another real estate agent’s services in case you are not satisfied with the first. Such a clause also allows agents to let go of the exclusive right to sell if they see they are unable to find buyers. Related: 10 Warning Signs of a Bad Real Estate AgentExclusive Right to Sell vs Open ListingAn open listing means you can work with as many real estate agents as you want. An open listing agreement may make selling your house faster because of the free competition among the agents. This agreement is binding and often includes a breach of contract section. But, the con is that top real estate agents do not usually work this way. They would ask for an exclusive right to sell contract in exchange for their premium connections and leads. Еxclusive Agency vs Exclusive Right to Sell The difference between these two listing agreements is subtle but important so it is essential to put one or the other in your residential real estate listing contract.Еxclusive agency This is a listing agreement where the owner selling a house works with one broker only, but the commission is due only if the broker finds the buyers. If you plan on putting up an ad or have a large network where potential buyers can come from, this might be the right listing agreement for you. Related: Real Estate Ads: Use These Words to Sell Your Property FastPros of exclusive agency:No commission is due if the seller finds buyers him/herself so the broker might be very active in finding leads and doing open houses. Cons of exclusive agency:If he/she is busy at the moment, however, or the property has some issues, the real estate agent might not be very proactive in selling your home because the commission is not secure. He/she might decide to dedicate time to other, easier to sell real estate properties and you may be left hanging. Exclusive right to sell The exclusive right to sell is most real estate agents’ preferred way of working because there is no competition. Granting an exclusive right to sell makes sense in many situations:It is a luxury property with special amenities like a pool, a pool house, a sauna, and a billiard table in the cellar. In this case, the broker should be able to show the property off and all its amazing features through proper home staging.It is a property with a very specific appeal – maybe it is perfect for millennials or a good vacation home for an elderly couple. The broker might have a database full of ideal target buyers, which would significantly speed up the process.You have worked with this real estate agent on other properties for sale before or invest in real estate and plan on sticking with one broker for all your deals. This is convenient for both sides and wins you the agent’s trust and priority service.You are selling a second home or an investment property in a city you do not know well and therefore need help and insights about the housing market there. Pros of exclusive right to sell:This way, the agent has a guarantee he/she will receive the commission and is likely to be more dedicated. Especially if you are a real estate investor, the agent would want to have you as a client again in the future. Also, the exclusive right to sell listing gives them full control over the offers and price negotiations so you are not likely to go below your asking price. Not sure what a good listing price for your property is? Benchmark it to similar properties in your area using our Real Estate Comps.Related: How Can I Sell My House Fast for Market Value?Cons of exclusive right to sell:The downside of such exclusivity is that a commission is due no matter whether the real estate agent sells the house or not. So if you find buyers through your own personal network, for example, the neighbors decide to buy out, you still have to pay the commission to the agent. In ConclusionWhen you sell a house, choose the listing agreement carefully according to your needs and criteria for a good real estate deal. If you want to sell as fast as possible, maybe an open listing will help so more real estate agents race to close the deal. If you are selling a house that’s pricier and are not ready to make discounts to lock the deal, maybe you should grant exclusive right to sell to a dedicated agent. List your property in the Mashvisor Property Marketplace. Get it in front of thousands of real estate agents and investors for free. Start Your Investment Property Search! START FREE TRIAL Agent 1FacebookTwitterGoogle +PinterestLinkedin Mira TeneffMira's family is in the real estate development business. She enjoys sharing her knowledge with others looking to invest in real estate. Previous Post A Step by Step Guide to Rental Property Analysis Next Post Airbnb Arizona Rentals May Face More Regulation Related Posts Everything You Need to Know About Selling and Buying a Home with Owner Financing How to Sell a Home During COVID-19 Lockdown Your Guide to Selling Real Estate Investment Properties How to Differentiate Between a Buyer’s Market and a Seller’s Market in Real Estate Here’s How to Find Cash Buyers for Real Estate 10 Best Real Estate Negotiation Tips for Sellers Should I Sell My House or Rent It Out to Fund Mortgage Payments? Summer 2020: Is It a Good Time to Sell a House? How Do I Sell My House Without a Realtor? Real Estate Marketing Strategies: How to Market Your Rental Property Comparative Market Analysis: A Guide for Property Sellers 2019: The Right Time to Sell Investment Property and Buy Another?