This arrangement establishes a contractual agreement where a property owner grants a single brokerage the sole authority to market and sell their property. During the term of the agreement, even if the owner finds a buyer independently, the brokerage is still entitled to a commission. This contrasts with other types of listing agreements, such as an “exclusive agency” agreement, where the owner retains the right to sell the property themselves without owing a commission, or an “open listing,” where multiple brokerages can be employed, and only the brokerage that successfully finds a buyer receives a commission. Consider a homeowner signing a six-month agreement; even if a relative expresses interest and purchases the house within that period, the real estate brokerage initially engaged is still due compensation as stipulated in the contract.
This type of agreement provides a level of security and focused effort. It assures the brokerage that its investment of time and resources in marketing the property will be rewarded if the property sells. This can lead to increased motivation for the brokerage to actively promote the listing through various channels. From the property owner’s perspective, this arrangement streamlines the sales process, ensuring a dedicated team is working on their behalf. The concept evolved from a need for clarity and commitment in real estate transactions, providing a clear framework for defining responsibilities and compensation within the broker-client relationship.
