Exclusive vs. non-exclusive real estate service agreement. Which one to choose?
Updated: Mar 20
When diving into home ownership, you may notice words and terms flying around that you may not understand. To avoid overwhelming you with the ins and outs of the real estate language, let’s start by talking about the difference between an exclusive and non-exclusive representation agreement (or real estate service agreement).
What is the difference between an exclusive and a non-exclusive buyer representation agreement?
In an exclusive representation agreement, you, as the home owner, agree to only use the services of that real estate agent to represent and assist you in the transaction with your property (sale or rent out).
In a non-exclusive representation agreement, you, as the home owner may use the services of multiple real estate agents at the same time. You can enter into multiple non-exclusive representation agreements.
These are just explanation of what agreements. But which one to choose when coming to an important deal like selling or renting out your property?
Let's look at it closer:
Exclusive Agreement: The agent is able to defend the interests of the client as best as possible and can negotiate the highest possible price.
Non-exclusive Agreement: The agent has limited possibilities for negotiating the most advantageous price possible. Since the property is being offered by more than one real estate office, the agent often has to accede to the “unfair” game that buyers and other offices play.
Exclusive Agreement: The agent is guaranteed the business transaction will take place. Therefore he/she devotes maximum care, time and finances to promoting the property in various media. This helps the property sell/rent out faster.
Non-exclusive Agreement: The agent does not have a definite result (the property can be sold/rent out by another office), therefore, the agent invests the bare minimum into promoting the property (limited advertisements).
Exclusive Agreement: The agent presents truthful information on the property, guarantees presales, sales and post-sales service and strives to achieve the highest sales price possible.
Non-exclusive Agreement: Agents of various offices with the goal to sell/rent out a property often distort information on the property and intentionally decrease the sales price (uncertain sales/renting price means lower credibility for the potential buyer).
Exclusive Agreement: The standard rate of commission enables the agent to invest more into promoting the property when seeking a potential buyer, professional quality of the rendered services and ensuring guaranteed legal services, insurance, purchase price deposit etc.
Non-exclusive Agreement: The agents of various offices with the goal to acquire a property to sell/rent out often offer lower commission (low investments into promoting the property, low quality of rendered services and agents, low guarantees).
Exclusive Agreement: High credibility of the offer (high interest of potential buyers). Non-exclusive Agreement: Low credibility of the offer (fear, distrust and low interest of potential buyers). The property appears in advertisements with various sales/renting prices, surface areas and a differing description.
Exclusive Agreement: Professional and serious agents no longer offer property sales without an exclusive agreement today.
Non-exclusive Agreement: Inexperienced and starting agents offer non-exclusive agreements.
An important note about Exclusive agreement that it is always have a fairly short term together with detailed description of what you would expect to receive during the agreement period. Hence once the period is over or you're not receiving the service according to the agreed description, you are not obliged to continue working with the agent.
The Representation agreement will be the first document you will or will not sign with the agent that will in many ways determine the success of the transaction. Choose your agent wisely and sign the Exclusive agreement to maximise the result of the deal.
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