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Exclusive vs. Non-Exclusive Agency Contract for Residential Sellers

Updated: Dec 12, 2023

Well, many of whether new or seasonsed property sellers may not fully understand the difference between an Exclusive and Non-Exclusive Agency Contract (or what many other parts of the world called a Closed Contract vs. Open Contract). While this article specifically talks about this concept for residential sellers, some parts of the information could also be applicable to certain scenarios in commercial property transactions and commercial sellers, however, I have to forewarn that commercial real estate is a whole other beast altogether, and cases vary vastly from transaction to transaction. On another note, as much as this content is relevant to all types of properties (on market or off market), this discussion does not entirely include properties that are OFF MARKET, but to summarize, there is also the distinction between Exclusive or Non-Exclusive contracts for Off Market properties.

Let's dive into this concept for mostly non off-market residential transactions and sellers for now:


Exclusive

Non-Exclusive

Contract & Legality Perspective

1/Seller signs an exclusive contract with ONE real estate agent. Seller can still engage other real estate agents or general advertising organizations with advertising activities (paid or unpaid) out of Seller's own expenses should they choose to do so. Even if an agent other than the agent with whom the Seller signed an exclusive contract with, brought a qualified Buyer and sold the property for the Seller, the Seller IS STILL OBLIGATED BY LAW to pay commission to the ONE real estate agent with whom the Seller signed an exclusive contract with.

Seller can sign a non-exclusive contract with multiple real estate agents, mainly for the purpose of authorizing the agent to advertise and list their properties. Seller can decide eventually to sell the property at any amount of price with any one of the many agents they sign a non-exclusive contract with (given there are no other stipulations stated in the non-exclusive contract itself limiting or restricting the Seller to certain conditions or terms). And this is why there are still certain amount of risks and restrictions with an Non-Exclusive contract, and this is ALSO why almost always real estate professionals will insist on signing an Exclusive Contract instead, given they both carry some amoutn of risks, yes, even with a Non-Exclusive Contract.


2/ IF SELLER SIGNED MULTIPLE exclusive contracts with multiple agents, then Seller is (potentially) obligated to honour ALL of these exclusive contracts to pay commission to all of whom the Seller signed an exclusive contract with, regardless of which agent sold the property in the end.

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3/ Clients are entitled to demand for a Formal Report from the Agent about the effort and activities invovled in managing the sale, should the client be suspicious of why a sale/lease was succuessful or not.

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Hard Value Perspective






As with always, for liability reasons, please consult a legal professional as this article is not a substitute of legal advice for Seller to rely on for legal and liability purposes.

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