When trying to sell a property, many homeowners think it’s a numbers game. They believe that the more property agents they engage, the higher the chances of promoting their property to potential buyers, and the faster they can sell it and possibly at a better price too. This is usually the reason why home sellers do not consider giving an agent exclusive right to market their property, which is done via signing an Exclusive Estate Agency Agreement. But is this reasoning true?
Having multiple property agents promote your property (via a non-exclusive Estate Agency Agreement) can indeed ensure that more listings of your property pop up on portals such as PropertyGuru, but quality is as important as quantity. Most importantly, an exclusive rights agreement has a finite period of up to 3 months, after which you’re free to approach another agent to market your property. So, if you are looking for someone who is motivated to devote more of his/her time and marketing resource (e.g. ad spend) to your property, giving the agent exclusive rights to market your property might be the way to go.
That said, there are both pros and cons of giving an agent exclusive rights agreement to market your property, but first…
What is an Exclusive Estate Agency Agreement?
Under Singapore regulations governed by the Council of Estate Agencies (CEA), in order to authorise a real estate agent to introduce you, the homeowner, to a prospective buyer or tenant of a property, you will need to sign an Estate Agency Agreement.
An Exclusive Estate Agency Agreement is similar to a regular, non-exclusive Estate Agency Agreement, except that you agree to authorise only the agent or agency in question to introduce buyers or tenants for your property over a certain period.
During the validity period of the Exclusive Estate Agency Agreement, if you enter into an agreement for the sale of your property, you are obliged to pay the agent a commission at the time of completion of the transaction. The Agreement also states that sellers cannot engage any other property agents while the contract is still in effect.
The seller may choose to renew the Exclusive Estate Agency Agreement if a suitable buyer has not been found during the validity period of the contract.
Pros of an ‘Exclusive Rights’ Agent Agreement
Having an exclusive agent means that you will deal only with one agent or agency, rather than multiple ones. Here are some of the benefits of doing so.
- Dedication – Agents promoting your property under an exclusive agreement know that they are the only ones handling your case, and don’t have to worry about another agent eventually finding a buyer for your property and pocketing the commission. As a result, they are likely to put more effort and time into promoting your property.
- Better marketing – Have you ever wondered why some property listings look so much better than others? An motivated agent with exclusive rights to market your property will put up more attractive listings with better pictures, ‘stage’ the property with nice furniture and/or the use of more sophisticated marketing tools like videos, which could attract more and higher quality buyers. Bonus: An exclusive Agreement may also specify the level and extent of services offered, such as frequency of advertisements and ‘open house’ sessions. This also means you can choose to terminate the agreement if your agent does not meet the commitment to service.
- Easier coordination – Having to communicate and coordinate with multiple agents can be troublesome and time-consuming, and negates one of the key benefits of using an agent in the first place—to save yourself time and hassle. Using just one agent is much more straightforward and saves you time in the long run.
- Will not result in overlapping of listings – Everyone uses the same few property listings portals these days, so by using multiple agents, the chances are higher that there will be more than one listing for your property on the same site. From our experience, seeing duplicate listings of the same property by multiple agents is a big turn-off for buyers, who might even think that you are a seller desperate to sell an inferior property or one with underlying issues.
- Better control over the price – When you hire too many agents, it is more difficult to stick to your asking price, and you run a greater danger of agents pressuring you to lower your asking price in order to attract more buyers, so they can be the first to close the deal. When you work with an exclusive agent, it is much easier to make your price expectations clear. And because the agent is not afraid to lose the deal to another agent, he/she has a greater incentive to ensure you get the best price possible.
Cons of an ‘Exclusive Rights’ Agent Agreement
The main disadvantage of hiring an exclusive agent is that you are not able to use multiple agents. But given the added hassle of doing so and the fact that your listings might end up being of lower quality, the efficacy of using multiple agents is questionable in itself.
That being said, in some circumstances, engaging an exclusive agent might come with the following disadvantages:
- You are locked in with one agent for better or for worse – In theory, engaging an exclusive agent can often lead to better services and more effective marketing. However, a lot depends on the agent himself. If you are unlucky enough to engage an agent who has lots of other cases to prioritise over yours, is simply not a skilled marketer or, worse, does not even bother to create a listing for your property, you will be stuck with him for the duration of the Agreement’s validity period.
- You need to pay the agent’s commission if you sell the property through any other means – If you manage to find a buyer on your own, whether through a personal connection or some other means, you are still obliged to pay the agent’s commission so long as you enter into a contract of sale during the validity period of your contract with the agent. You should thus avoid entering into an exclusive agreement with an agent if you plan to play a part in marketing your property, as you will have to pay a commission regardless.
Also take note that if you sign an Exclusive Estate Agency Agreement, you’ll also have to pay your appointed agent commission if you sell your property to someone referred by the said agent within three months AFTER the validity period expires.
Should you give a property agent ‘exclusive right’?
Even though most signs point toward saying ‘yes’ to an exclusive agent, that’s not the main issue. At the end of the day, the most important thing is to find a good agent you trust and who is willing to put the time and effort into marketing your property well.
Also note that, even if you may be working with one exclusive agent, many agents nowadays typically have a team to support them in their marketing efforts and even connect prospective buyers to your property. These agents are able to do so because they pool their resources as part of a division in a larger agency. In this case, the perks of signing an Exclusive Agency Agreement are magnified.
So, once you have found an agent you’re confident of marketing your property well, granting him/her exclusive rights to brokering a sale for your property is a good way to ensure a headache-free transaction. On the other hand, if you have not found an agent you can trust with selling your property, it could be prudent to try out multiple agents until you find one you wish to work with exclusively. Even then, you should be selective regarding the number of agents allowed to market your property.
Found this guide helpful? Read more articles on selling your property, or jump to our listings to see what’s the asking price of similar properties in your neighbourhood!
Joanne Poh, contributor of PropertyGuru, wrote this article.