What does it mean when a listing is an exclusive?
Listings that are labeled exclusive indicate the owner has signed an agreement to sell the apartment with one broker.
When you see the term "exclusive" next to a listing, it means the selling broker has the sole right to market the apartment and earn the commission if they close the deal. This is an arrangement between the seller and the broker, and it's one of the ways a broker protects their income. Simply put: They take on the full responsibility of marketing the place and in return they get paid.
"What makes it exclusive is that it is listed with only one broker," says Elise Kessler, an attorney at Braverman Greenspun.
These exclusive agreements typically run from three to six months, so if someone buys the apartment within that timeframe the broker has the right to collect the commission from the owner. Apartments across the city are typically on the market for 130 days or more right now, so exclusive agreements in this market will run longer.
Negotiating an exclusive agreement
If you're a seller, Kessler says you need to understand whether you are giving the broker an exclusive right to sell versus an exclusive agency. "With an exclusive agency, the listing agreement appoints the broker as the exclusive agent, but typically allows the owner to sell the property themselves without owing a commission," she says.
For example, in situations where someone has already approached the owner and shown interest in buying the place or the seller knows someone in the same building who might want it, the broker might not get the commission.
With an exclusive right to sell, the listing broker is entitled to a commission if the property is sold by the owner, by the broker, or anyone else. Kessler recommends a seller sign an exclusive agency agreement and not an exclusive right to sell, and make sure the agreement reserves the right for the owner to sell the property on their own without having to pay a commission.
You get what you pay for
Keep in mind that the commission effectively pays for the effort you get from a broker. Kobi Lahav, senior managing director and director of sale sat Living NY, says brokers have to put a lot work and money into marketing a property and they want to make sure they aren't putting in all that time and effort for nothing.
The seller is paying the real estate agent to market and sell a property, says Gerard Splendore, a broker with Warburg Realty. "The purpose of the exclusive agreement is to outline the responsibilities and obligations of each party," he says.
In other states it's fairly common to advertise someone else's property. That's not the case in NYC. "If it is your exclusive, no one can show it without you," Lahav says.
He points out listing sites like StreetEasy and Zillow won't post apartments from brokers unless they are the exclusive brokers for the listing. That said, pay attention to the broker you contact if there are multiple names attached to a listing. You may be reaching out to a buyer's broker who is paying to advertise via StreetEasy's controversial Premier Agent program—not the exclusive broker.
Buyers are always allowed their own brokers
An exclusive listing does not exclude a co-broking arrangement with the buyer's agent where the two will split the commission. As a buyer, you always have the right to be represented by a broker.
The Real Estate Board of New York has rules around this and members can't refuse to split the commission with a buyer's broker.
The opposite of an exclusive is an open listing
If you don't have an exclusive agreement, your apartment sale will be an open listing. In this scenario, any agent can advertise or show a listing with the seller's permission. The downside, Splendore says, is that there's no single point of contact for information about the property or to handle showings, negotiations, and the transaction.
When you are negotiating an exclusive agreement, Kessler suggests making sure it states that no commission is due until or unless the closing takes place.
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