Understanding the various types of agencies is crucial for property owners when considering the appointment of a real estate agent.
Open Listing
An open listing is a written agreement between the owner and the selling agent. In this arrangement, the owner authorises the selling agent to sell the property according to the terms specified in the agreement. During the agreement’s term, the seller retains the right to sell the property independently or engage additional selling agents under similar terms. The appointed selling agent is entitled to payment only if they are the effective cause of the sale. Either the owner or the agent can terminate the appointment at any time.
Exclusive Agency
In an exclusive agency, the selling agent is entitled to receive the agreed commission or reward upon the property’s sale, irrespective of whether they are the effective cause of the sale. For residential property sales, where it’s the only property being sold, the appointment period can extend up to a maximum of 90 days. The agreement may include a provision that, at the end of the exclusive agency term, the agent’s appointment continues under an open listing, which can be terminated by either the agent or the owner at any time.
A real estate agent may be reappointed for an exclusive agency for the sale of residential property for one or more terms of up to 90 days.
Sole Agency
The sole agency differs from an exclusive agency only in the extent of the selling agent’s entitlement to receive an agreed commission or reward upon the property’s sale. In a sole agency, the agent is entitled to the agreed commission only if they are the effective cause of the sale; otherwise, the agent doesn’t receive the commission. For the sale of residential property (where it’s the only property being sold), the term of a sole agency is negotiable, with a maximum of 90 days. Similar to an exclusive agency, the appointment may continue under an open listing at the end of the sole agency term, and it can be terminated by either the agent or the owner at any time.
A real estate agent may be reappointed for a sole agency for the sale of residential property for one or more terms of up to 90 days.
Real estate agents argue that the advantages of a sole or exclusive agency include dealing with only one agent, handing out only one key, and the agent’s dedicated promotion of the property. However, owners should be mindful that these agencies lock them into the agreement for a specific period. If the agent’s promotion of the property is unsatisfactory during this time, the owner cannot appoint other agents without violating the agreement. In appointments lasting 60 days or more under a sole or exclusive agency, either party can end the appointment with a 30-day written notice, but the appointment must run for at least 60 days unless both parties agree to an earlier end date.