Like most of today’s consumer-centric service industries, Realtors must be able to meet the needs of their customers and clients. There are agency relationships we have with Buyers and with Sellers. Let’s take a look at the different agency relationships that can exist between Sellers and Realtors.
As far as casual relationships with a Seller are concerned, the Open Listing is very casual. Basically, the owner of a piece of property agrees to pay a Broker a fee if the Broker can sell the property. The owner still has the right to sell the property directly to someone and not pay a fee to the Broker with the Open Listing. Also, another Broker can contact the owner, sell the property and be paid a fee that is not shared with the original Broker who had the open listing. An Open Listing can be valid with only verbal permission from a Seller to a Broker to show a piece of property at a certain price. These verbal Open Listings are valid but not enforceable because they are not in writing. The verbal Open Listing is really casual, like fishing clothes casual. When an Open Listing is in writing, then the listing would be enforceable, so this still would be casual, but dressy casual.
The next step up in agency would be the existence of an Exclusive Agency relationship between the Seller and the Broker. The Seller still has the right to sell their property themselves and not be liable to pay the Broker a fee. The difference is that any other Brokers who might want to sell the property must go through the broker who has the exclusive agency with the Seller. These types of agencies must be in writing to be enforceable.
The Exclusive Right to Sell Agreement is the most stringent of all of the Broker/Seller relationships. During the terms of this type agency, the Seller has agreed to pay the Broker a fee at the closing of the sale of the property, “delivery of the deed,” regardless of who sells the property, be it the Seller, a relative, friend or another Broker. This Agency Agreement must be in writing and will contain more language about what the Broker will be doing to try to sell the property during the term of the agreement.
That is a very brief explanation of the basic differences in the three agency relationships. In all of the situations, the Broker very possibly might not get paid. For instance, if the property doesn’t sell, then no fee is owed to the Broker. In order for a Broker to be able to commit the resources of time, energy, and money to the marketing of the property, they must feel that they have increased the odds of getting paid. The Exclusive Right to Sell Agreement does that by assuring that the Broker gets paid regardless of who sells the property but the odds need to be improved more than just that. A well thought out and executed marketing plan, proven track record in the market place, proper pricing, and a professional group of good, successful people to implement the techniques also increases the odds that the property will sell during the term of the listing. We’ll talk more about the services you should expect from your Realtor next time.