If we have to define an exclusive contract with a real estate agent in a few words, it would be that it is an agreement where the real estate agent gets a commission if the property sells within a certain number of months. So, essentially it is to motivate the agent to sell the property quickly and at the best price.
You know what it is like – you put your house on the market and you can end up being involved with the agent for months, even a year. The agent puts a lot of effort into helping you sell your home. The agent knows the market and can provide data on home sales in your area.
Table of Contents
- The agent tackles all the hard stuff of selling a home
- The exclusive contract applies to both sellers and buyers
- Important contract information is stipulated
- What percentage do real estate agents make?
- Signs of a bad real estate agent
- Always make sure you understand the Ts & Cs
The agent tackles all the hard stuff of selling a home
The agent has access to homes they know you will like and which you might not have access to without an agent. The agent does a lot for you in terms of tackling all the documentation that comes with selling a place and buying a new one. Possibly one of the more important aspects of selling a home and buying a new one is knowing the legal aspects and this is where a real estate agent is so useful.
Suddenly opting to use another agent
But what happens when despite all the work the agent puts in for you you opt to suddenly use another agent? This is where an exclusive contract with a real estate agent becomes necessary.
If you are selling your house, the real estate agent may well ask you to sign an exclusive contract. If you are not familiar with such a contract you may even wonder if you should sign it. If you do sign it, you are essentially agreeing to work with that specific agent for a certain time. So you are giving the listing agent the right to work with you. Of course, if you do not get your home sold during the specified time, you can extend the contract further or you can choose to work with a different agent.
So if you have signed an exclusive contract with an agent, you can’t just opt to work with another agent. You have to at least wait until the contract is over. You can certainly work with another agent once the contract expires. As an example, if you have signed an exclusive buyer’s agent agreement for a particular kind of property such as a single-family home, you are able to work with another agent for looking for a multi-family home.
So an exclusive contract with a real estate agent makes sure that the buyer is not able to look around on other sources for home and work with the listing agent. So in other words they can’t discard their existing agent to work with a new agent.
The buyer’s agent can spend months working with a client and assist them through the entire buying process and then not get compensated. That is why an exclusive contract with a real estate agent protects the work the agent does.
The exclusive contract applies to both sellers and buyers
Many buyers and sellers do not feel right in a certain relationship with agents and if they do not like the relationship, they will switch and go somewhere else. An exclusive contract with a real estate agent actually applies to both sellers and buyers. With an exclusive contract with a real estate agent, you can be sure that the agent will be totally dedicated to working for you.
If you are selling your property, it can be nice knowing that you have a professional agent in your case. Signing an exclusive contract with a real estate agent is a wise move and when you sign such an agreement, you can be sure that your agent will be confidential at all times, disclose everything the buyer needs to know, and be diligent with all transactions.
A buyer’s agreement works a little differently. This kind of exclusive contract with a real estate agent means that the buyer does not pay any commission. If the real estate agent represents the buyer exclusively, the agent is entitled to their part of the commission paid by the seller.
You will discover that most listing agents go for an exclusive contract and it makes sense. After all, nobody wants to market a property and then get no commission. A buyer’s agent would not take all the trouble to look for and show properties and then not be compensated for their efforts. Buyer’s contracts are negotiable, and you can create an exclusion for a family member or friend in the contract so that you can sell your property without having to pay commission to your agent.
Important contract information is stipulated
An important thing in the exclusive contract with a real estate agent is the stipulation of the agent’s commission. The contract specifies the conditions for the payment of the agent fee and also the duration of the collaboration. It also lays out what happens should the person selling their property suddenly decide they want to use the services of another real estate agent.
The exclusive contract with a real estate agent has the exclusive listing agreement and also the exclusive right-to-sell agreement. The exclusive listing agreement gives the homeowner the freedom to sell without any restrictions.
If they sell using their own means they would not have any obligation to pay the agent commission. With the other kind of exclusive contract with a real estate agent, the agent payment is guaranteed. The real estate agent will get paid come what may.
What percentage do real estate agents make?
Signing an exclusive contract with a real estate agent is saying that the agent has the right to sell your property. When you use the services of a real estate agent, you have to wonder what you will be paying them.
What percentage do real estate agents make? Most of them make money through a commission which is worked out in accordance with what the home’s selling price was. Sometimes it is a flat fee. The agent’s fee will usually be laid out in the listing agreement. This is a contract between a seller and the listing agent.
The rate of the agent’s commission is negotiable. Most sellers add the commission to the asking price. So if a house goes for $200 000, if the agent earns 6% commission, the commission the agent earns can be $12,000. But it is quite common for a top agent to get a larger percentage commission.
Commissions are usually paid when the sale goes through. But there are times when the seller is still liable for the broker’s even though the transaction is not complete. So while it is most times the norm for agents to be paid a percentage of the commission, some real estate agents employed by a broker are paid a salary. Other real estate agents are paid on a commission-only basis and some get a base salary and bonuses. To answer the question of what percentage do real estate agents make, you can say that generally, commissions are anything between 4% and 6%.
But do real estate agents get paid hourly? A lot actually depends on the brokerage you join. Brokers take a percentage of the agent’s commission, so profits are split. To answer the question: do real estate agents get paid hourly and if they do, what do they get by the hour?
The truth is that agents do not get paid by the hour but you can still get a rough answer as to what their hourly earnings would be. During 2020, the Bureau of Labor Statistics revealed that realtors were making about $30 an hour, although some of the better-paid realtors were getting a little more than $50 an hour. So the answer to the question do real estate agents get paid hourly, the answer is no.
As suggested an exclusive contract with a real estate agent applies to the seller and buyer and benefits each. It is an agreement between the agent and the client. With an exclusive contract with a real estate agent, you can know that you will get full cooperation from them.
Signs of a bad real estate agent
These days signs of a bad real estate agent are evident. There was a time when real estate agents had to work hard to get their commission which was not that much. They used to be falling over their feet to get your business and they would suggest- and take you to see lots of different properties.
If none of the properties appeal to you, the agent would come up with a new list of properties to take you to see, phoning you and keeping you fully updated on properties available.
These days the signs of a bad real estate agent are evident. You are the one doing most of the searching for a property to buy. Most times, if you do need help from an agent, you find that they do not bother to return your calls. If you do manage to get hold of an agent, forget them driving you to see properties.
Get yourself there or do not see the property. Yet they still want their commission from you, after you are the one that has done all the work. They are supposed to be providing you with details on current market conditions, assisting you through the entire home buying process, assisting with financial information, researching homes for you, showing you homes in your price bracket, and facilitating the negotiations of a home purchase. They are lazy and it leaves you wondering that with technology at our disposal, you can get by without the need of a real estate agent.
The real estate agent should be there to ease the entire selling and buying process, after all, selling and buying a new property is a massive monetary commitment. It can be a nightmare to work with a lazy real estate agent who is not interested in helping you achieve your goals.
All you can think of is terminating the agreement with the estate agent. If the seller or buyer can see that the real estate agent is lacking in every way, they want out. Unfortunately, with an exclusive contract with a real estate agent, you can’t rope in the services of another agent while you are saddled with the useless one and the contract expires.
You have got to wait for the contract to expire which is usually between 30-90 days. If you can’t come to an agreement with the agent, you may just have to wait for the contract to expire.
Always make sure you understand the Ts & Cs
When someone sells their house, they may have to sign an exclusive contract with a real estate agent. It means the seller is agreeing to work with a particular real estate agent to sell their house. This is according to the National Association of Realtors. The seller agrees to work with this one agent for the purpose of selling their home within a certain period of time.
So, in other words, the seller is dependent on the agent to sell their home. The agent agrees to advertise the property and carry out a host of other functions to bring about a sale. Even if the seller advertises their property somewhere else and manages to sell the property, the agent is still owed the commission.
If you are in any doubt as to how an exclusive contract with real estate works, always check out the terms and conditions section of the contract because there you will find details about canceling a contract when you just cannot continue with the agent you have.