Real estate agents won’t agree to an exclusive agency listing because of the conflicts of interest present in such an arrangement between the owner and the agent.
The owner might just be price checking an existing offer, and the agent could easily end up marketing a property for months for free.
Plus, it doesn’t help that owners decide who to sell to, and agents have to engage in excessive monitoring to avoid disputes around who sourced a buyer.
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An exclusive agency listing is a real estate listing with only one broker, the exclusive listing agent, marketing it for sale or rent.
For the avoidance of doubt, this means that other brokers will not be able to also list the property on the MLS or public search websites under their agency names.
The only exception is if another broker is also an exclusive listing agent of the property, in which case the listing is a “co-exclusive.” As the name suggests, a co-exclusive simply means there are multiple brokerages, all explicitly named in the agreement, exclusively listing the property for sale or rent.
What’s unique about an exclusive agency listing is that the owner also has the right to find a buyer on their own, and will not owe any commission to the exclusive listing agent by doing so.
As we’ll discuss in the next section, this possibility does not sit well with most full-time real estate professionals. Who would agree to run around for months showing a property, only to have it be sold from under them by the owner?
Understandably so, exclusive agency listings are quite rare vs exclusive right to sell listings which account for the vast majority of traditional listing arrangements.
As an interesting side note, listing agreements in New York typically have an “explanation” section with New York Department of State mandated language included, explaining what an exclusive agency listing means vs an exclusive right to sell listing:
An “exclusive right to sell” listing means that if you the owner of the property, find a buyer for your house, or if another broker finds a buyer, you must pay the agreed commission to the present broker.
An “exclusive agency” listing means that if you, the owner of the property finds a buyer, you will not have to pay a commission to the broker. However, if another broker finds a buyer, you will owe a commission to both the selling broker and your present broker.
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Real estate agents typically never agree to an exclusive agency listing arrangement for a variety of reasons, unless they are desperate or the owner has agreed to an extraordinarily low listing price.
No one likes to run around for free
You wouldn’t work for free, so why would you put your real estate agent in that same potential position?
Real estate agents understand that there’s a great deal of work involved in managing a sale listing, from private showing requests at odd hours to calls late in the evening.
As a result, the last thing they’ll want to do is to agree to work on a listing for several months, produce multiple offers, only to have the owner sell it to someone else at the end.
The owner might be doing a price check on an existing offer
The owner may have already negotiated an offer directly with his or her neighbor, and is simply using the hapless listing agent to do a comprehensive market check on pricing.
Even if the listing agent finds a higher offer, net of commission, the owner still might screw the agent over by giving the last look to the owner’s original buyer. This means the owner would take the listing agent’s higher offer, and ask the original bidder to match or improve upon it.
This is great for the owner because not only has he or she gotten the original bidder to improve their offer, but the offer price has been validated by a wide, public marketing process. Unfortunately, this isn’t so good for the listing agent who did all of this work for nothing, except to give a price check to the owner.
The owner decides who to sell to
Another reason why agents are loathe to accept an exclusive agency listing is because it is the owner who decides who the winning bidder is. As a result, a listing agent may work very hard to find the highest offer on the public market, but the owner can always choose to decline selling and instead opt to encourage his own buyer to match the offer from the listing agent.
Remember that the listing agent has no idea whether the owner has a solid buyer waiting, and what the state of those negotiations are.
Who sourced the buyer?
The fact that the owner is able to not pay commission by finding their own buyer creates serious conflicts of interest, and often produces an antagonistic vs cooperative relationship with their listing agent.
A prime example is in determining who actually sourced each buyer, and this is not as black and white as some first time home sellers like to think.
For example, a homeowner will claim that their neighbor Frank on the 2nd floor is their buyer, because well, Frank is their neighbor.
However, their listing agent may disagree because Frank walked into their open house, or perhaps even inquired on another of the agent’s listings.
At this point, who does Frank belong to from a relationship perspective?
As you can imagine, these kind of political battles should be left at the corporate office, and not introduced to one’s home sale process.
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Excessive monitoring is when a listing broker, typically working on an exclusive agency basis, continuously monitors and takes credit for listing inquiries from buyers and buyer’s agents.
A listing broker will need to engage in this relatively inefficient process to be able to claim that he or she brought the buyer and was the procuring cause of the sale.
This means the listing broker will need to meticulously document in writing the name, contact information and notes about each incoming call, private showing, walk-in buyer and conversation about the listing.
Even though inefficient, the risk for the listing agent in not engaging in excessive monitoring is that he or she won’t have definitive proof of sourcing the ultimate buyer, and ending up in a dispute with the owner over who actually found the buyer.
As you can imagine, no serious real estate listing agent will agree to put up with this, which is why exclusive agency listing arrangements are so rare both in New York as well nationwide.
