 Personal Finance PowerPoint Presentation, Exclusive Listing. Get ready to get financially fit by practicing personal finance. Most of this information can be found at Investopedia Exclusive Listing, which you can find online. Take a look at the references, resources, continue your research from there. This is by Gene Folger, updated September 30th, 2021. What is an exclusive listing? So we're thinking about the home sale type of process, how to get that thing listed. Seeking help to do that and focusing in on the exclusive listing. And exclusive listing is a type of real estate listing agreement in which property seller appoints and specifically authorizes one, that's the keyword, one real estate broker to act as the seller's sole agent. So we're hiring one broker within our contract to help support us being acting as our agent in the home sale process as opposed to or by contrast with in an open listing. The seller retains the right to employ any number of brokers as agents. So there's going to be pros and cons as to whether or not you want the exclusive listing, you want the one broker to be acting on your behalf, or do you want the open listing where you can have a number of brokers possibly. How an exclusive listing works? A listing agreement is a contract under which a property owner as principal authorizes a real estate broker as agent to find a buyer for the property on the owner's terms, a service for which the owner pays a commission. So we got the seller, the seller wants to sell a home. They're going to be hiring someone to act and make certain decisions on their behalf with regards to the specific item in a similar way as a lawyer might do in like a court kind of situation, hiring an agent to act on their behalf. In this case, they're going to be making decisions with regards to the listing and so on with the sales process. So we've got that broker in there for that. And obviously there's going to be a form of payment that is going to be within the contract as well. Notice every time we have an agent involved in this way, we still always have to consider the agency issue or problem. That being that the agent should be acting on the behalf of the seller, but clearly the agent's interests are although somewhat aligned or not completely aligned because the agent is interested, is motivated from a financial perspective on what they're going to sell it for and the seller might have other interests involved. So obviously from a financial standpoint, you've got to think about what the interests are for the particular agent. So to understand, so for example, you could imagine situations where the agent would want you to increase the sales price. For example, if they wanted you to renovate the house in such a way that it's going to cost you more than the increase in the sales price that they would receive, obviously the agent would benefit out of the higher sales price and they wouldn't be involved in the renovations that would cost you money. So you could see from a financial perspective, you could have situations where you have this kind of agency problem. So to understand how an exclusive listing works, it's helpful to first consider open listings. In an open listing, the seller retains the right to employ numerous brokers as agents. The seller is obligated to pay a commission only to the broker who successfully produces a ready, willing and able buyer. So if you have the open listing, then you've got multiple, you could possibly have multiple agents that are going to be helping or looking to sell the home in order to get a piece of the commission, right? And that would be one method to go about it. If the seller finds a buyer without the help of any of the brokers, without the help of any of the brokers, then the seller is not obligated to pay a commission to anyone. So if you are the one that basically finds the buyer yourself, then you didn't really have a broker that was taking on that capacity. Oftentimes, of course, the broker is someone that's going to help out with the listing process on the seller's side of things. So an exclusive listing works differently. In an exclusive listing, only one broker is specifically authorized to act as the exclusive agent of the seller. So now you've got one broker that is acting on the seller's behalf and you're dependent basically on that one broker. And so if it's someone that you are working closely with and you trust well, then you could have a good situation there. But obviously you have the pros and cons between the single broker and possibly multiple brokers that are all kind of competing to try to sell the home. So that means one broker has the sole right to market, show, and sell the property. Other brokers are excluded from trying to sell property while agreement is active. So you got one broker that has the exclusive right to be acting on your behalf as the seller and possibly taking more aligned steps and have more ability to know exactly what you're looking for within the process as opposed to having multiple brokers kind of in a competitive type of situation that are competing to find a suitable buyer competing, of course, for the commission on the sale. An exclusive listing can be simple for the seller in that there's only one broker to work with. However, an exclusive listing can result in less exposure for the property and, in turn, fewer interested buyers. So clearly you have some pros and cons with the exclusive listing. If you're working with one person, then working with that one person could be a benefit because you can work well with one individual as opposed to having multiple individuals that you may not, you know, obviously you don't have as much background with multiple brokers, but you're going to get less exposure you would think than if you had multiple brokers basically competing for the commission. So once again, an exclusive listing can be simpler for the seller in that there's only one broker to work with. That could be an easier situation. However, an exclusive listing can result in less exposure for the property and, in turn, fewer interested buyers. So types of exclusive listings. There are two types of exclusive listings. Number one, exclusive agency listing. One broker is appointed to act as the exclusive agent for the seller. So remember an agent kind of situation. Most people probably think of like a lawyer type of situation as the primary agent, you know, in your mind, the lawyer representing a client in a court case, for example. But you have a similar situation in certain areas. You give the agency to someone else to act on your behalf in certain areas such as, in this case, the selling of the home. So you got the one broker is appointed to act as the exclusive agent and in that particular realm, as opposed to basically having multiple people trying to compete for that item. The seller retains the right to sell the property with no obligation to the broker. So the seller could sell the property. However, the seller is obligated to pay a commission to the broker if the broker is the procuring cause of the sale. So if the broker does the job, which you would expect generally the broker would be incentivized and good at and determined to do, which would be to find the buyer, then of course, she'd be contractually required to pay the broker. So however, the seller is obligated to pay a commission to the broker if the broker is the procuring cause of the sale. Number two, exclusive right to sell listing. This is the most commonly used real estate contract with this type of listing agreement. One broker is authorized as the seller's sole agent and has exclusive authorization to represent the property. While the listing agreement is in effect, the broker receives a commission no matter who sells the property. So that you see it's a bit more stringent there. And most of the time, obviously, if you're working with a broker, you're probably dependent on the broker to be doing this type to be listing the property and so on and so forth. It's not, you know, you might be in a situation where you're going to hire one broker and then you're going to try to compete with your own broker basically and sell it yourself as well. But I mean, oftentimes you would think that you'd be pretty reliant on the broker if you're hiring an exclusive broker to do that job. So special considerations in Canada and exclusive listing is what is referred to in the U.S. as a pocket listing or off market listing. A single broker handles this type of listing, which is not made available to the general public or listed in the multiple listing service, the MLS. Instead, the broker tries to sell the home to their existing private network. So in that case, you're not going to list the home as you generally would on the multiple listing service, but you're going to try to work with your own networks in order to sell it. So sellers who ask for a pocket listing generally do so to maintain privacy, e.g. the rich and famous, or to sell to a specific person.