What is an exclusive contract and what should it include?
Exclusive contract or exclusivity is a contract you sign with a real estate agency and with your signature you give the real estate agent a monopoly on the sale or lease of your property. This means that no other real estate agent can arrange for it, nor can you sell or rent a particular your property yourself.
Why sign an exclusive contract?
Even if the exclusive contract is characterized by a distinct limitation of constraints and may seem to be advantageous only for a real estate agency, it makes sense for you as a client to think. Exclusivity of real estate will ensure better promotion by the real estate agency. The advantage for you is above-standard service. Conversely, the offering of more real estate agencies is usually counterproductive, because the information on real estate in individual offers may vary, and it does not trust. In addition, an artificial overhang is created, the owner is often forced under the pressure of realtors and brokers to reduce the price to much less than the real value of the house or flat offered. An exclusive contract will help you determine the best price. If you are worried that one office can not cover the whole market, then it can calm you down that a number of offices work together to sell real estate on the basis of different agreements, cooperatives or professional associations. Your offer will then reach out to demanding clients from several different offices, while you only communicate with one broker.
For more on this topic, please read Article 5 differences between Exclusive and Non-Exclusive agreements.
What to watch out for
Collaboration with a real estate agent does not have to be paid out if you come across a non-serious company. It is therefore necessary to choose carefully. Examine your exclusive contract carefully before signing.
It is also good to conclude a fixed-term contract, such as three or six months. If you are dissatisfied with the real estate agency, you can entrust the sale to another office after this time. Conclusion of a contract of indefinite duration, on the other hand, can lead to a stretch of trade, as the broker does not press anything to take care of the contract with due care.
Many clients would like to sign a contract for only 2 or 4 weeks. But this is the time the real estate agency can not do in most cases. But it can be accepted, for example, in rentals.
The agreement should include, in addition to the price and quantification of the commission, guarantees from the realtor that it will do the maximum for mediation of the sale or lease and their obligations to the client. It is also good to mention how the property will be promoted. If the property owner insists on any specific terms of sale, they should be included in the contract. Sanctions for non-compliance are also important for both parties. Most often, here is a contractual fine. Beware of contracts where the rights and obligations of both parties are not clearly defined.
Beware of contracts with an unreasonably high contractual penalty, or those where you would bear the costs associated with offering a property even if you fail to sell. The real estate office is doing its own responsibility, and therefore the costs associated with offering the property should be borne by themselves.
Another trick is to attract the client at an unreasonably high sale price, without being based on real facts. He, under the vision of high profits, signs an exclusive contract, and after he is told that he has to reduce the price quickly - if he disagrees and wants to denounce the contract, he naturally gets a penalty for non-compliance.
Although there are still offices that try different fintages to win the client, while maintaining elementary caution, the exclusive mediation contract is the most effective form of real estate sale.
What should an exclusive mediation contract include:
- the period when the contract is valid (simply from.... to......)
- list of services to be provided by the real estate agency
- commission amount
- clearly defined purchase price (can not be reduced without the owner's knowledge)
- specific data on the property sold
- real estate agent information and representative broker
- owner data
- reasonable contractual terms (understood to be balanced for both parties)
What you do not sign in the mediation agreement in any way:
- when the contract is for an indefinite period (long notice period, usually 2 months)
- automatic renewal of the contract
- if the contract includes costs when "not selling" the property (why should you pay when the service has not been fulfilled?)