What is an exclusive agreement and its advantages?

If the time has come in your life when you need to make a real estate transaction, we recommend choosing reliable specialists in this field, who have a rich history of conducting such transactions. To do this you just need:

• Choose a real estate agency
• Enter into an exclusive contract with him

In this case, your plans and dreams will take on real shape.

What is an “Exclusive Agreement”?

In simple terms, this is an “oath of allegiance” in exchange for quality services. An exclusive contract is a guarantee that the property will be sold at the most favorable price for the seller and purchased on the best terms for the buyer.

In conditions when five competing firms are simultaneously trying to sell the same object, the one with the lowest price is more likely to succeed. This means that agencies involved in the sale of real estate can lower prices for faster implementation.

Therefore, it is very important that the Client completely trusts the agency and entrusts the sale only to him. Then you can be sure that the work is carried out conscientiously, efficiently and professionally. Thanks to guaranteed payment for its services, the agency will make every effort to successfully complete the transaction. Such an agreement is possible only with one company, otherwise it is not exclusive.

It is a mistake to think that an exclusive agreement is something special and expensive. When it is concluded, the commission will be within the usual limits, those that exist in a particular agency - that is, you will not overpay anything.

Now let's look at the specific advantages and disadvantages of this agreement:

pros

• The contract must be fixed-term, that is, it must provide for a certain period of validity (usually at least three/four months).
• The document must clearly state the subject of the contract, that is, a list of actions that the agent undertakes to perform. In particular, preparation of documents, support of the transaction in the justice authorities, control of the transfer of funds and acceptance and transfer of the apartment. Otherwise, the realtor may not take all the actions taken or take them selectively at his own discretion.
• The contract must spell out the rights and obligations of the parties as accurately as possible.
• The amount the seller will receive and the mechanism for paying for the agency's services must be specified.
• On the issue of penalties. There is no need to be afraid of this: do not violate the terms of the contract, and it will not threaten you. The amount of the penalty usually consists of a percentage of the agency’s commission and the amount of expenses actually incurred in the process of work.
• If cooperation involves the need to transfer documents for an apartment to a realtor for storage, this should be reflected in the contract as a separate provision with reference to the mandatory drawing up of a transfer and acceptance certificate.
• Do not be afraid of the clause about the possibility of the seller granting a power of attorney to the realtor to carry out certain actions on his behalf. In order to collect the documents necessary for the transaction, a number of government agencies require either the presence of the owner or a power of attorney from him. A notarized power of attorney may involve granting the agent the rights to collect documents, or to collect documents and sign a purchase and sale agreement, or to collect documents, sign an agreement and receive funds. Whether a power of attorney is needed and what powers to grant the agent - the decision should remain with the customer.
• There is also no need to be afraid of the provision on the possibility of involving third parties in the execution of the contract. In some difficult cases, a realtor may need the help of specialized specialists, for example, a lawyer or an appraiser.
• The contract must stipulate the conditions for its early termination and the consequences of this action for the parties.
• It is worthwhile to provide for the possibility and procedure for making changes and additions to the agreement. For example, if you want to change the desired amount of money from the sale of an apartment or the timing of the sale.
• The requirement to confirm the work performed with a relevant act also does not entail any unpleasant consequences for you, but is caused by the need to correctly complete the paperwork for tax and other reporting.
• Protection of the seller from crime and unprofessionalism. By providing information to several real estate agencies, the seller risks becoming an object of interest for scammers. It is possible that information could leak due to the fault of one of the dozens of agencies that are selling his apartment.
• Protection of the economic and legal interests of the seller. The experience and professionalism of our staff guarantees the successful completion of the transaction. The dishonesty of the buyer, sudden complications, accidental mistakes and other possible nuances of the transaction will not affect the client, since the entire progress of the transaction is strictly monitored by the company. Lawyers, security service, department heads and other specialists of the company work for the client.
• Real assessment of the apartment and better orientation on the market. An apartment cannot be assessed by looking at it or hearing its description over the phone. In order to sell an apartment, professional realtors do a large amount of work on its assessment, analysis of analogues, market research, analysis of supply and demand, real sales prices, and not offer prices indicated in printed catalogues. Many sellers believe that the more agencies know about the sale of an apartment, the faster it will sell. Nothing like this. The media and database is one for all real estate professionals. And even if you contacted one company, soon the entire real estate community will know about your desire to sell your square meters. Therefore, there is no need to run around to all agencies.
• Opportunity to save time. By contacting several agencies at once, the seller wastes his time explaining and communicating the same information to many specialists. By entrusting the sale to a professional working in a reliable company, you can reduce the number of risky contacts and increase the chances of selling your apartment on favorable terms.
• Flexible and effective advertising scheme. By concluding an exclusive agreement, the agency provides the seller with the widest and most effective advertising. The apartment is exhibited in all professional real estate publications and in electronic databases. Thus, the maximum number of information sources is covered.

Agency rights and privileges

Since the seller’s right to offer similar rights to another agency during the term of the contract is limited, the agency is able to operate in a non-competitive environment .

The seller completely entrusts the agency with the sale of his property, and the agency receives the right to perform actions specified in the contract in favor of the seller in an exclusive manner:

• Full verification of real estate documents, documents are stored in the agency;
• Effective advertising campaign;
• Real price that is acceptable for the seller and the agency (offered based on a study of the real estate market;
• Guarantee of payment for services or penalties in the event of a change in the seller’s circumstances;
• Consultations on all issues.

If you want to learn how to sell an apartment yourself, we advise you to read the article.

Minus

It consists in the fact that the client gives the property to one company. And choosing an agency is a very serious undertaking. There is a risk of falling into the hands of people who will not be able to defend his interests in the market. Moreover, a weak agent can only make matters worse. For example, the price of an apartment will be determined incorrectly, in this case it will be underestimated, but the client will be forced to work with the intermediary on unfavorable terms, since a rigid contract implies penalties. You may also encounter an unprofessional agent who, even with guaranteed payment, is unable to give his best.

Therefore, it is very important before signing such an agreement to make sure that you are dealing with a highly qualified specialist working in a reliable company.

Why enter into an exclusive agreement?

People don't often deal with buying and selling real estate. The mediator talks well and praises his service. He says that it is free for the seller and the buyer will pay for everything, or for 5-6% of the cost he will help sell the apartment for more. He says that the sale will go faster and only with an exclusive will success await.

In some cases, realtors try to deceive and, through manipulation, force them to sign an exclusive deal.

Here is a video advertisement in which realtors are asked to improve their skills in influencing property owners. But the most important thing at the beginning is that 98% of owners are not happy to see an intermediary in the sale of their real estate. Here we agree with them.

Summary

Still, the advantages of an exclusive agreement significantly outweigh the disadvantages. Market conditions are constantly changing, and an honest and competent professional who knows and monitors the market will definitely inform the seller about this and will use such changes in his interests.

Speaking to ourselves, we are a reliable and successful company that has been steadily operating in the real estate market of Kaliningrad and the Kaliningrad region since December 1994. During this period, the ERWIN agency has accumulated invaluable experience in the real estate market, and has become one of the most competent agencies in the city.

The professional experience of our leading specialists, who stood at the origins of real estate activity, is 10-20 years, and most of them have been working in the company since its foundation. They are aimed at ensuring that the client receives high-quality professional real estate and related services in a timely manner.

We are always ready to help you resolve any housing situation with maximum comfort and benefit for you.
Back Home

Realtors are taught to enter into exclusive agreements

Realtors are taught in special courses how to conclude an exclusive contract for the provision of services with the property owner, how to persuade the seller and how to get what you want.

The exclusivity should be beneficial to both parties to the transaction, and not just to the realtor. Therefore, carefully read the terms of the contract. If it does not suit you, we do not recommend signing it.

Related article: How much do realtors earn?

Pure psychology and persuasion are at work here. Mediators memorize phrases to answer your objections correctly.

If you say: “I don’t need a contract, I’ll pay a commission if you sell the apartment,” then the intermediary already has a thousand plans on how to convince you to sign an exclusive for sale. They specifically learn to persuade you to enter into an agreement and achieve their goal.

Applications

The agreement may have annexes that supplement the information specified in its main structure. This information includes:

1. Detailed description of the property (location, infrastructure, condition of the premises, number of rooms, layout, etc.).
2. Confirmation of consent to purchase housing indicating its cost, amount of advance payment, etc.
3. Payment schedule.
4. Power of attorney for the official representative of the customer.
5. Certificate of acceptance/delivery of services.

To enter into an exclusive agreement or not

It's up to you to decide. You guarantee a person’s income, and he undertakes to sell your apartment for a fee. If the situation is positive, then you will sell the apartment, and he will receive the money.

In one of the contracts that we studied, there was even a clause that if you sold it yourself after the end of the contract, then for another six months you still have to pay a commission to the realtor.

Typical clauses of an exclusive agreement

If you don’t want to trust the sale to anyone and are ready to figure it out yourself, then sell it yourself. If you initially set a price that is adequate to the market, then dozens of intermediaries will call you with an offer to bring clients. Ordinary buyers who want to view and buy an apartment will also call.

The main thing is the adequate price of the apartment, pre-sale preparation, good photographs, correct description and good sales conditions. On all these points you will need to do work and preparation.

Reviews about the exclusive agreement

Sometimes people come to us asking us to help them pick up documents from the agency and terminate the exclusive contract. When a buyer is found, but the sale cannot be made, people begin to realize that they are in a difficult situation.

The reviews are negative due to the fact that no one understands what they should pay for if the service is not provided. But there are also satisfied clients.

If you want to completely entrust the sale of your apartment to 1 person and pay him a commission, then an exclusive agreement is suitable for you.

The main thing is to choose a good contractor and guarantee him payment for services. If an exclusive agreement is imposed on you and they want to take away the documents, then you should not sign.

Document structure

An exclusive agreement does not have a standard form established by law and is drawn up in simple written form .

Like any other agreement, an exclusive agreement must contain:

1. an indication of the parties who entered into the agreement (customer and contractor);
2. responsibilities of the customer and the contractor;
3. duration of the agreement;
4. subject of the agreement - an apartment or other residential premises that is for sale (rent);
5. price of the object (rental cost);
6. the cost of the contractor’s services and the procedure for settlement with him by the customer;
7. legal liability of the parties in case of violation of the terms of the agreement.

The parties to the agreement can set a specific cost for the contractor's services, paid by the customer, or specify a fixed price for the apartment , and agency commissions will be added to the sale price.