Last updated 21 June 2016
It is important for an owner who is about to appoint a real estate agent to be aware of the different types of agencies.
An open listing is a written agreement entered between the owner and the selling agent under which the owner appoints the selling agent, in accordance with the terms of the agreement, to sell the property. Under the agreement, the seller keeps a right to sell the property themselves during the term of the agreement or to appoint additional selling agents to sell the property on terms similar to those under the agreement. With this type of appointment, the appointed selling agent is entitled to be paid only if they are the effective cause of the sale. The appointment of the agent can be terminated by either the owner or the agent at any time.
Under an exclusive agency, a selling agent is entitled, on the sale of the property and in accordance with the terms of an agreement, to receive the agreed commission or other reward, whether or not the selling agent is the effective cause of the sale. Where the property being sold is a residential property, the period of appointment can be up to a maximum of 90 days. The appointment may include the provision that at the end of the term of the exclusive agency, the appointment of the agent continues under an open listing that may be ended at any time by the agent or the owner.
A real estate agent may be reappointed for an exclusive agency for the sale of residential property for one or more terms of not more than 90 days.
The only difference between an exclusive agency and a sole agency is the entitlement of the selling agent to receive an agreed commission or other reward on the sale of the property. Under an exclusive agency, the agent will be entitled to the commission agreed, whether or not the agent is the effective cause of the sale. Where the agency is a sole agency, the agent would not be entitled to the commission if the seller is the effective cause of the sale.
For the sale of residential property (where this is the only property being sold), the term of a sole agency is negotiable up to a maximum of 90 days. The appointment may include provision that, at the end of the term of the sole agency, the appointment of the agent continues under an open listing that may be ended at any time by the agent or the owner.
A real estate agent may be reappointed for a sole agency for the sale of residential property for one or more terms of not more than 90 days.
Agents claim that the advantages of a sole or exclusive agency are that the seller only has to deal with one agent, only one key has to be given out, and there is a conscientious promotion of the property by the agent. On the other hand, owners need to be aware that the effect of these agencies is that the owner is locked into the agreement for a stated period of time. If the agent’s promotion of the property is not satisfactory, the owner is unable to appoint other agents without breaching the agreement.