Exclusive listings

Under an exclusive listing, a broker receives the sole right to represent:

  • an owner by marketing the listed property for sale or lease and locating a buyer or tenant;
  • a buyer or tenant by locating property; or
  • the owner or a lender to originate a trust deed mortgage.

Exclusive listings require an agent to use diligence in their efforts to fulfill the client’s objectives in locating a buyer, tenant or lender for the property. [See RPI e-book Real Estate Principles, Chapter 24]

An exclusive listing has a specified period of employment set by an expiration date of the employment, such as 90 or 180 days after its commencement. When an expiration date is not included in an exclusive listing, the broker faces suspension or revocation of their license by the Department of Real Estate (DRE). [Calif. Business and Professions Code §10176(f)]

Two types of exclusive employment agreements for buying and selling real estate exist:

  • an exclusive agency agreement for a seller or buyer; and
  • an exclusive right-to-sell or right-to-buy listing agreement. [See RPI Form 102 and 103]

Both types of exclusive listings establish the broker and their agents as the sole licensed real estate representatives of the client (seller or buyer).

However, they are distinguished by whether or not the broker has any right to a fee when the property is sold or located solely by the efforts of the client.

Under an exclusive agency agreement’s fee provision, the broker does not earn a fee when the client, acting independently of any other broker and the client’s broker, accomplishes the objective of the employment, i.e., selling the listed property or locating and buying the property sought.

Conversely, under an exclusive right-to-sell/buy agreement’s fee provision, the broker earns a fee no matter who during the listing period produces the buyer or locates the property sought under the listing, be it the client, another broker or other representative of the client, or the client’s broker.

Related Video: Exclusive right-to-sell and right-to-buy listings

Click here for more information on exclusive listings.

Exclusive right-to-sell listings

An exclusive right-to-sell listing affords a real estate broker the greatest protection of their fee. It is also the most commonly used type of employment. [See RPI e-book Real Estate Practice, Chapter 9]

The exclusive right-to-sell listing employs the broker as the sole agent to act on the behalf of the owner to market the property and negotiate any sale with all potential buyers and their agents. The broker is entitled to a fee regardless of who procures the buyer. [See RPI Form 102]

Under the exclusive right-to-sell agreement, the owner relinquishes their right to list the property with other brokers or defeat entitlement of the seller’s broker to compensation by selling the property themselves or removing it from the market.

An owner of real estate, on entering into an exclusive right-to-sell listing agreement, grants a broker the right to locate a buyer for the property prior to the expiration of the period of employment specified in the listing agreement.

The broker is entitled to the fee agreed to in the listing agreement when, during the listing period:

  • the property is sold on any terms, no matter who produces the buyer; or
  • the broker or their agent presents the seller with a bona-fide offer from a ready, willing and able buyer on terms sought by the seller under the listing, or on other terms accepted by the seller. [Calif. Civil Code §1086(f)(1)]

Exclusive right-to-sell listings give a broker and their agents the greatest incentive to work toward attaining the client’s goal of locating a buyer. The seller’s broker does not compete with the client to sell the property — they work together to achieve the sale. [See RPI Form 102]

Related Video: Exclusive Right-to-Sell Listings: A Closer Look

Click here for more information on exclusive right-to-sell listings.

Exclusive right-to-buy listings

For brokers and their agents, an exclusive right-to-buy listing creates a positive collaborative activity which is to be matched up to agents who list and market property for sale. It is the opposite side of the transactional coin. [See RPI e-book Real Estate Practice, Chapter 15]

A buyer’s listing agreement employs the broker and their agents to locate qualified properties to be purchased by the buyer represented under an exclusive right-to-buy listing. [See RPI Form 103]

As with an exclusive right-to-sell listing, the right-to-buy variation has provisions for a brokerage fee to be paid by the buyer (when not the seller) when the buyer acquires property during the listing period of the type described in the buyer’s listing.

Also, the exclusive right-to-buy listing provides greater incentive for brokers and their agents and imposes a duty to work diligently and continuously to meet their buyers’ objectives.

The buyer benefits under an exclusive right-to-buy listing due to the greater likelihood the broker will find the particular type of property sought.

Related article:

Brokerage Reminder: The buyer’s listing – the listed buyer benefits

Brokers have continuous access to all available properties and will investigate and qualify properties as suitable before they are presented to the buyer. Brokers will also advise the buyer on the pros and cons of each property presented.

A buyer’s broker locating properties listed by other brokers does not become a dual agent or lose their status as the buyer’s exclusive agent merely because the broker works with seller’s brokers. The fee received by a buyer’s broker is typically paid by the seller, directly or through the seller’s broker, and does not create a dual agency.

A broker who seeks out and locates properties at the buyer’s request negotiates the purchase terms as the buyer’s agent regardless of who pays the fee (which is nearly always paid by the seller from the proceeds of the sales price paid by the buyer).

Related Video: Exclusive Right-to-Buy Listings

Click here for more information on the exclusive right-to-buy listing.

Analyzing the right-to-sell listing

The exclusive right-to-sell listing is prepared and submitted to the seller as the broker’s offer to act as the seller’s exclusive real estate agent to:

  • market the seller’s property;
  • locate a ready, willing and able buyer; and
  • negotiate a sale. [See RPI Form 102]

A seller’s agent uses the Seller’s Listing Agreement — Exclusive Right to Sell, Exchange or Option form published by Realty Publications, Inc. (RPI) when entering into the employment of an owner of a property as their sole agent for a fixed period of time. The form allows the seller’s agent to list the property for sale, locate a buyer and sell the property. [See RPI Form 102]

Each section in the exclusive right-to-sell listing agreement has a separate purpose and need for enforcement. The sections include:

  • Brokerage services: The employment period for rendering brokerage services, the broker’s due diligence obligations and any advance deposits by the seller. [See RPI Form 102 §§1 and 2]
  • Broker fee: The seller’s obligation to pay a broker fee, the amount of the fee and when the fee is due. [See RPI Form 102 §3]
  • Conditions: Authority for the broker to receive a buyer’s purchase offer, accept a good-faith deposit, enter into fee-splitting arrangements with brokers representing buyers and enforce the listing agreement. [See RPI Form 102 §4]
  • Property description and disclosures: Identification of the listed real estate and any personal property that is also being sold, the terms of existing financing and the conditions of the property. [See RPI Form 102 §§5, 6 and 7]
  • Sales terms: The price and terms sought by the seller for the sale, exchange or option of the property. [See RPI Form 102 §§8, 9, 10 and 11]
  • Signatures and identification of the parties: On completion of entries on the listing form and any attached addenda, the seller and broker or their agent sign the document consenting to the employment. [See RPI Form 102]

Similarly, when a short sale of a property is involved, the broker uses a version of the listing agreement with a short sale contingency. [See RPI Form 102-1]

Related Video: Option Listings and the Guaranteed Sale Variation

Click here for more information on listing variations.

Analyzing the right-to-buy listing

A broker and their agents use the exclusive right-to-buy listing agreement when counseling with a prospective client who needs to find and buy a property. [See RPI e-book Real Estate Practice, Chapter 16]

A buyer’s agent uses the Buyer’s Listing Agreement — Exclusive Right to Buy, Exchange or Option form published by RPI when employed by a prospective buyer as their sole agent. The form allows the buyer’s agent to prepare an offer to render services on behalf of the buyer to locate and acquire property for a fixed period of time. [See RPI Form 103]

The sections of the buyer’s listing agreement include:

  • Brokerage services: The employment period for rendering brokerage services and the broker’s due diligence obligations are set forth. [See RPI Form 103 §§1 and 2]
  • General provisions: Enforcement of the employment agreement and broker fee-splitting arrangements are included. [See RPI Form 103 §3]
  • Broker fee: The buyer’s obligation to either pay a broker fee or assume payment of the broker fee by the seller or a seller’s broker, the amount of the fee and when the fee is due. [See RPI Form 103 §4]
  • Property sought: A general description of the type of property to be located for the buyer is then entered. [See RPI Form 103]
  • Signature and identification of the parties: On completion of entries on the listing form and any attached addenda, the buyer and the broker (or agent) sign the document consenting to the employment. [See RPI Form 103]

Formal documentation of an obligation to pay a fee — a written agreement signed by the buyer — is the legislated and judicially mandated requisite to the right to enforce collection of a broker fee for a purchase transaction closed by the buyer.

Similarly, the Specific Property Acquisition variation is used when the broker has been employed to negotiate the acquisition of a specific property. [See RPI Form 103-1]

Related article:

Brokerage Reminder: Get paid by your buyer, not played

Want to learn more about exclusive listings? Click an image below to download the RPI book cited in this article.

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