Advantages and disadvantages of signing an exclusive contract with a real estate agent or agency

In an exclusivity contract, the period for the sale or transfer of a property ranges from three to six months or until it is sold. In this regard, it is advisable for us not to establish very long durations. Before signing an exclusive contract, it is better to reflect on its advantages and disadvantages, with the aim of making the best decision.

As there are advantages and disadvantages for each one, it is important to choose the agreement or mandate that best suits the priorities and circumstances of each client. Below, we explain the difference between these two types of mandates, so that you can make the best decision.

Non-Exclusive Sale or Transfer Mandates

This type of sale or transfer mandate allows the seller or owner to retain the right to sell, transfer, or rent the property. They can have an open agreement or mandate with multiple agents or real estate agencies and will only pay commission to the agent who finds the buyer or investor. If the seller finds the buyer or investor themselves, they are not obligated to pay any commission.

In this situation, sellers or owners generally do most of the work themselves, so commission fees for agents are usually much lower than those requested with an exclusive agreement or mandate.

Advantages of Non-Exclusivity:

• The main advantage is that properties tend to sell faster due to competition between real estate agents. On the other hand, each agency has its own list of potential buyers or investors, who may differ in demographics. Sellers or owners get access to all these potential buyers or investors, instead of just accessing the client portfolio of a single agency.
• Another advantage is that sellers or owners do not need to pay commission if the property is not sold.
• In addition, sellers or owners can decide to cancel the services of a real estate agent without penalty or waiting time.
• And in case the sellers decide to sell the property themselves, they will not incur any real estate service charges, as long as the buyer or investor has not previously visited with a real estate agent.

Disadvantages of Non-Exclusivity:

• The main disadvantage is that no customized marketing and advertising campaign is offered, as this responsibility falls on the seller or owner.
• Non-exclusivity can lead buyers or investors to perceive the property as having some problem (open files, for example), so they will adopt a more aggressive position when negotiating and try to lower the price. If they don't succeed with one agency, they will press to get it with another.
• On the other hand, sellers or owners have many points of contact during the sales, transfer, or rental process, which can be confusing and difficult to manage the negotiation.

Sale or Transfer Mandates with Exclusivity

• This type of sale or transfer mandate grants real estate management rights for a determined period of stay (or until sold, transferred, or rented).
• During its validity period, sellers or owners cannot use the services of another real estate agency. The real estate agency becomes the only authorized one.

Disadvantages of Exclusivity:

• In this case, the real estate agent may have difficulty finding a buyer quickly and profitably for both parties, as it may take a long time to receive a suitable offer.
• On the other hand, they are usually more expensive (higher commission percentage than non-exclusive agreements) and sellers cannot sell the property on their own.
• As sellers must stay with the same real estate agency until the end of the agreement, this can be frustrating if they are not satisfied with the agency's performance.

Advantages of Exclusivity:

• The main benefit is that sellers or property owners can build an open and honest relationship with the real estate agency, as there is no competition, since they prioritize the sale of the property, knowing that there is no competition for the commission.
• On the other hand, the real estate agency will offer a personalized marketing and advertising strategy that optimally promotes the property and, with the aim of achieving the best price, will use all available resources to ensure that the property is presented well, including tips on beneficial renovations or other ways in which sellers or property owners could increase the value of the property.

An exclusive mandate demands quality standards in the service provided by the real estate agency, so if the seller is not satisfied, it is entirely revocable. On the other hand, in case of non-compliance, the seller must pay the agent or real estate agency's fees, in addition to the costs of such contractual non-compliance and the interest generated.

In summary, despite the advantages mentioned, this type of agreement does not guarantee a quick, easy, and agile sale.

Therefore, there are advantages and disadvantages to each type of agreement or mandate for assignment or sale, so it is essential to choose the type of agreement or mandate that best suits the priorities and circumstances of our clients.

While some property owners choose to sign an exclusive assignment or sale mandate with a real estate agent or agency, others prefer to sign a non-exclusive sale or assignment mandate.

Whether under exclusive or non-exclusive conditions, at Kamvy Property Advisers, we are willing to offer you the best service and accompany you throughout the process of sale, transfer, or rental of your next investment. Contact us!

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