Someone comes into your office looking to buy a home. You walk them through dozens of online listings to get an idea of what they like. You spend hours scheduling a series of showings. You bring your client to all of the homes. Then you hear that they put in an offer on a different home—with another buyer-broker agent. You should have got them to sign an exclusive contract!
Someone comes into your office looking to sell their home. You walk through the home. You use your extensive knowledge about the market to give them a realistic appraisal, advice on how to maximize the value through staging, and a list of minor upgrades that will generate a positive return. Then you find out that they put their house on the market—with another listing agent. You should have got them to sign an exclusive contract!
An exclusive contract protects you in these situations. Some states require them, but even where they are optional, you should be working to get your clients to sign an exclusive contract with you as the real estate agent.
Whatever contract you are drawing up with your clients, SignTime has you covered with this recent article detailing everything you need to know to draft your own real estate contracts as well as links to helpful templates for use in every state.
What is an exclusive contract with a real estate agent?
An exclusive contract with a real estate agent is a deal between a realtor and someone who is either looking to buy or sell property. The exclusive contract stipulates that the real estate agent will be the only person representing the buyer or seller in a real estate transaction.
In a buying situation, the real estate agent will work as the buyer-broker. In a selling situation, the real estate agent will work as the listing agent.
In both situations, the exclusive contract with a real estate agent is designed to protect the realtor in the case that a property transaction takes place without their involvement.
Depending on the state and the contract, an exclusive contract with a real estate agent lasts between 30 and 90 days. During that time, the realtor is entitled to a commission on the sale or purchase of a property involving their client, even if the transaction does not involve them.
Why you should get your clients to sign an exclusive contract
It can take a lot of time to get to a real estate transaction. Even if you weren’t involved with the actual sale or purchase of the property, you likely coached your client to understand the market, their rights, and what they are looking for in the transaction.
As a listing agent, you helped your clients understand the value of their home and how to maximize its value. As a buyer-broker, you helped your clients understand what they want and need in a home and to refine their search. That’s a lot of value you added to their real estate journey, as well as a lot of time and money you invested in that potential commission.
To protect your business interests, you should work hard to lock your prospective clients into an exclusive contract early. This requires a knowledgeable, friendly, and honest discussion about what an exclusive contract with a real estate agent means, and why they should be happy to sign one.
Let’s look at some common questions prospects might ask and how you can answer them.
Some common questions prospective clients might ask you
Here are some common questions you will hear from clients and simple answers you can use to get them to sign an exclusive contract.
What is an exclusive buyer-broker contract?
An exclusive buyer-broker contract is between a real estate agent and someone looking to buy a home. The two parties sign a legally binding contract that states that the buyer-broker will be the only agent to work on behalf of the buyer during the tenure of the contract.
What is an exclusive listing contract?
An exclusive listing contract is between a real estate agent and someone looking to sell their home. The two parties sign a legally binding contract that states that the listing agent will be the only agent to work on behalf of the seller during the tenure of the contract.
How long does an exclusive contract with a real estate agent last?
The duration of an exclusive contract is written out in the contract. Generally, they are between 30 and 90 days long, but different jurisdictions have different limits in place. Within those limits, it is possible to negotiate shorter or longer durations.
How does the compensation work in an exclusive contract?
The compensation will be set out in the purchase agreement and is generally an agreed upon commission. If a buyer or seller decides to pursue a transaction with a different agent or acting on their own behalf during an exclusive contract, the agent may still be entitled to their compensation.
How can you get out of an exclusive contract with a real estate agent?
There are usually specific rules for canceling an exclusive contract. The contract will expire automatically after the determined duration of the contract.
Exclusive buyer-broker contracts are often for a specific type of property, for example, a detached home, and the buyer might be able to buy another class of property, a condo for example, with a different agent.
Sellers can sometimes get out of an exclusive listing contract by deciding not to sell their home.
Should you sign an exclusive contract every time you transact with a real estate agent?
If you are confident that you will be making a real estate transaction within the specified duration of the exclusive contract, then an exclusive contract is in your best interest.
This is the single best way you can guarantee that your real estate agent is only working on your behalf. It is also the best way to make them an attentive and motivated agent. By signing an exclusive contract, the agent agrees to work for you and will be confident that investing their time in you will pay off.
However, be sure to shop around for the best real estate agent before signing an exclusive contract.
Exclusive contracts protect your effort as a real estate agent
Exclusive contracts between a client and real estate agent protect the client as well as the realtor. Your commission is guaranteed during the duration of the contract, while your clients can be confident that you are working in their, and only their, best interests.
That’s a win–win situation.
When it comes time to get a client to sign an exclusive contract, or any other contract, SignTime is there to help. With convenient e-signature capabilities, you’ll get signed contracts back from your clients in record time.
With an easy-to-access and organized online contract repository, never search for important paperwork again.