What is a non exclusive contract?
What does this mean in a human language? Let's look into the subject together with our experts from Realt Advisor. Alongside with a non exclusive contract there is, as the logic follows, an exclusive contract. Both are types of listing real estate contracts and the main difference between the two is that the non exclusive contract allows a real estate agent to get their commission only in case they sell the property. When the contract is exclusive the real estate agent will get their commission respectfully of who sells it.
Do I need any kind of contract at all?
Be that an exclusive or non exclusive contract both sound quite complicated. This may bring up the point: "How badly do I need a real estate agent at all? Can I try to sell/buy a house on my own?" Not that this is a totally absurd campaign, but there are high risks of making wrong steps and choices. Plus, you'll still have to get into all the details of all types of legal documents. At that point maybe the only types of documents you won't have to deal with would be exclusive and non exclusive contracts. The agency on the other side takes full responsibility for the legal actions, it is their responsibility to help you find a home that suits your needs. The agency represents you in all authorities and thus saves you a great deal of time and money.
So which type of an estate contract is better for me: an exclusive or non exclusive
Since our best recommendation for you as a future owner of a new property as well as a seller of one would be to use a real agent or advisory, we are getting back to the point of the legal grounds to be used in an agency-customer interaction. First thing you will have to sign is a Buyer Agency Agreement. Let's talk about these two types of such Agreement (or Contract) in more details:
- An exclusive contract kinda limits you on one Buyer Agency only. Based on this type of a contract you can only hire one agency and you are legally obligated to pay them a commission even if you finally find a house on your own. The reason for that is that the agency is still responsible for the purchase to be completed successfully and will deal with all the paperwork on your behalf. The only case when you don't have to pay a commission (and this should be listed in the contract) is when the commission is paid by the seller. Normally an exclusive contract lasts six months and more up to a year. That actually works on you because it gives you more time to maneuver. You won't feel all stressed out and take full advantage of this time to consider all choices given. Make sure you consult your Realt Advisor before you make your decision.
- A non exclusive contract seems to be a more flexible option in terms of the parties involved. You can hire several agencies and also look for your own opinions. In this case though you have to inform the agencies that there are other parties involved and also what property options you have been presented. Another good feature of a non exclusive contract is that you don't have to pay commission unless it was specified in the paperwork. Out of the disadvantages of a non exclusive contract is the time limit. A non exclusive contract is normally signed for a period of several months only. It can also be very specific to a property/complex or a list of specific features. That may cut you close on timing but can also work out perfectly well if you need to find a property as soon as possible. Our best advice would still be to consult a legal advisor and discuss all the options.
Can I trust an agent to give me real info on the type of the contract?
Is there a chance that your real estate agent will try to take advantage of you and convince you to sign a contract that is more convenient for them? The short answer is No. Any Real Estate Agency or Buyer Agency is legally obliged to give you a full volume of information on both exclusive and non exclusive types of a contract. Including all advantages and disadvantages of both. The same says The Code of Ethics and normally the agency will be happy to fully inform you plus give you all the additional options available for your specific case. If trustworthiness is still an issue we would highly recommend consulting a Realt Advisor and see what other real estate options you have.
Are there any other types of buyer-broker agreements that I need to know about?
Actually, yes. And that is another reason to consult a professional legal advisor for all the details that you might need. Anyways, there are two main types of non exclusive contracts that you need to know about.
- Non exclusive, not for compensation
- Non exclusive, right to represent
Let's see what's the difference.
A non exclusive, not for compensation contract only specifies the agency's responsibilities. It does not regulate any kind of compensation that parties may feel like demand in frames of the agreement. So that is the most general type of an agreement.
This is the one though where you can specify if you are willing to hire more agencies to work with or the one you're signing the contract with is to be the only one to represent you as a buyer.
A non exclusive, right to represent contract pretty much only describes the responsibilities of the agency and specifies a no compensation requirement. There is one big thing you might find useful in this type of a non exclusive contract: there is no responsibility in place for compensation. You don't have to pay commission if it is paid by the seller.
Obviously this is a very brief description of the main types of Buyer-Broker Agreements. For more information do not hesitate to contact us at Realt Advisor. We are more than happy to provide you with all necessary professional legal advice that you may need for your real estate purchase.
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