Selling a home involves more than finding a buyer, it’s also about understanding the contract with a real estate broker. Many homeowners believe a commission is only due when an agent directly sells the property, but the agreement’s wording often tells a different story.
In most cases, real estate brokers work under one of three listing agreements: exclusive right to sell, exclusive agency, or open listing. Each type sets unique terms for when a commission becomes payable, regardless of who brings in the buyer.
The Three Main Listing Agreements
An exclusive right to sell agreement is the most common in residential real estate. Under this contract, the homeowner agrees to pay a commission if the home sells during the listing period, no matter who finds the buyer. Even if a family member decides to buy the property, the broker is still legally entitled to that commission.
However, an exclusive agency agreement allows homeowners to sell the home on their own without paying a fee, as long as they personally locate the buyer. The broker only earns a commission if their efforts result in the sale.
An open listing is less common in home sales but appears more often in commercial real estate. It’s a “first come, first serve” setup, where multiple brokers compete, and only the one who closes the deal earns the commission.
Reading the Fine Print
Real estate agreements are binding contracts. Even when the broker hasn’t shown the home to a single buyer, the legal obligation to pay may still apply. Homeowners should carefully review their contract’s terms before assuming they’re off the hook.
If the agreement grants the broker an exclusive right to sell, the law typically sides with the broker. Yet, in practice, many agents are open to negotiating a reduced commission when a sale happens through family or personal connections.
A Smart Move for Homeowners
Homeowners can protect themselves by asking questions upfront and clarifying the broker’s rights before signing. Understanding whether the agreement is “exclusive right to sell” or “exclusive agency” can save thousands in unexpected fees.
Real estate law may sound complex, but it boils down to one principle: a signed contract carries weight. Reading every clause and discussing commission terms can prevent costly surprises later.
When handled with transparency, both homeowners and brokers can part ways respectfully, even if the broker didn’t close the deal.