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Real estate agents typically ask property owners to sign an exclusive right of sale agreement, which guarantees the agent a commission and exclusive rights to sell the property. Other agreements may cost less but require upfront payment and may result in less effort from the agent. The exclusive right of sale agreement is legally binding and can only be terminated before a sale by firing the agent.
When a real estate agent is contacted to sell a home or property, he or she will ask the owner to sign an agreement. There are many different types of agreements with real estate agents, but the most common is the exclusive right of sale. This agreement ensures that the agent is paid a commission on the sale of the property, and ensures that the agent will do his or her best to sell the property. An exclusive right to sell is a legally binding agreement, so the owner cannot get out of it unless they fire the real estate agent.
Of all the agreements that real estate agents can have a client sign, the exclusive right of sale is the most common. This is because it gives the agent the exclusive right to sell the house. No other agent can try to sell the property as long as the agreement is valid, and the agent is sure to get a commission when the sale occurs. Even if the property owner sells the property without the agent, the agent must still legally receive the agreed commission.
Agreements other than the exclusive right to sell may cost the owner less money in commissions, and the owner may not pay an agent. Most agents, if they are willing to use other deals, may not work as hard to sell a property, because there is no guarantee that money will be made. Typically, when one of these other agreements is signed, the real estate agent will request payment up front to ensure that he or she makes money trying to sell the property.
An exclusive right to sell agreement is legally binding. This means that if the owner refuses to pay the agent their stated commission after a sale, the agent can sue the client for damages and lost wages. There are often other stipulations in the exclusive right to sell agreement, such as an agreement that the seller may not contact other agents, nor may the seller attempt to sell the property without the agent specified in the agreement.
If the seller is not satisfied with the agent and does not feel that the agent deserves a commission, the seller can withdraw from the exclusive right to sell. This can only be done before a sale. The seller can fire the agent, who usually breaks the agreement. The agreement may offer other ways to sever any connection with the agent, and the seller and a lawyer should read it carefully before signing.
Smart Asset.
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