How an Exclusive Right-to-Sell Listing Works in CRE Brokerage

When it comes to selling your commercial property, you’ll face a choice: go through the sale process alone or hire a commercial brokerage to handle it on your behalf. If you decide to go the route of an exclusive right-to-sell listing agreement, there are some things you should consider before you sign on the dotted line. This article will help you understand what to expect from the partnership and the benefits of working with a commercial broker.

What Is an Exclusive Right-to-Sell Listing?

An exclusive right-to-sell listing agreement is a legally binding contract that gives a commercial real estate (CRE) broker the right to market and sell your property. They’re responsible for advertising your commercial asset, creating listings, scheduling tours and negotiating sales. They also earn a commission on the sale regardless of whether they found the buyer or you did. Because a CRE broker is guaranteed a commission, they take complete responsibility for the sale process, so you don’t have to handle it alone. Working with an experienced CRE brokerage means you’ll have access to expert guidance, local market knowledge and an established network of contacts.

How Common is an Exclusive Right-to-Sell Listing?

Among listing agreements, an exclusive right-to-sell contract is the most common. It’s advantageous for both sides: it gives brokers the financial security to market your property effectively and gives you a better chance at a competitive deal. CRE sales are also long processes because of due diligence, zoning reviews, environmental compliance and negotiations. Exclusive right-to-sell agreements typically last 30 to 90 days, giving your broker ample time to complete those tasks before their window of opportunity expires.

How an Exclusive Right-to-Sell Agreement Works

Valuation and pricing: Your broker will review recent comparable sales, the net operating income, expenses, physical condition and rent rolls to determine the value of your property. Based on those details, they’ll recommend pricing and a buyer profile to include in the listing.

Signing the listing agreement: Once you and the broker have agreed on the listing price, agreement duration and commission rate, you’ll sign your listing agreement. As the owner or investor, you’ll be required to provide accurate and up-to-date property information to ensure the CRE broker can perform their role effectively throughout the length of the agreement.

Marketing the property: It’s the broker’s responsibility to research, advertise to and connect with qualified buyers. That includes taking professional photos and video footage and creating comprehensive listings on sites like LoopNet and CoStar. They can also conduct direct outreach via calls and emails to investor databases and other connections.

Negotiating offers: Brokers collect and assess letters of intent, which are non-binding documents that indicate a potential buyer’s interest in your property. They’ll compare offers, assess buyer strength and negotiate counteroffers with your interests at heart.

Closing and commission: This phase of the process requires the buyer to complete inspections and financing. It’s the broker’s responsibility to see that those processes stay on track by working with appraisers, attorneys and lenders. They’ll also ensure funds and deeds are transferred properly at closing. Their commission comes from the proceeds of the sale according to the terms of your exclusive right-to-sell agreement.

Exclusive Right-to-Sell vs. Open Listings

Instead of working with a single broker, you may work with several agents if you decide to go with an open listing agreement. Only the broker who brings you the buyer gets paid, and no one is owed a commission if you find a buyer yourself.

Because there are no exclusive rights in an open listing, brokerages must compete with each other to find someone to purchase your property. That can be problematic if a buyer has contacted more than one of your brokers, making it difficult to determine who’s earned the commission. Listing a property with different brokers can also lead to marketing inconsistency, as each may describe your asset differently, quote different numbers and use different photos for listings.

You may consider an open listing if you want to keep your options flexible, have an unusual commercial property or want to test the market.

Key Terms to Know Before You Sign

Commission rate: This is the term that outlines how much you pay the broker after the property sale is complete and how it’s calculated. It’s typically a percentage of the sale price.

Listing period: The listing period is the length of time that a broker holds exclusive rights to sell your property.

Protection period: Also known as a tail clause, this period protects a broker’s commission after the listing period ends. It can last up to 180 days but varies by contract.

Exclusions: These are circumstances or buyers excluded from the broker’s commission.

Termination clauses: You or a broker may end an exclusive right-to-sell listing agreement based on the specific termination clauses in your contract. They can be based on certain circumstances, such as performance benchmarks or a breach of contract.

Why Use an Exclusive Right-to-Sell Agreement

This type of contract with a brokerage offers the following benefits:

• An exclusive partnership for simpler communication
• Professional connections and resources
• Direct outreach to potential buyers
• Better sale pricing and terms
• Consistent property presentation
• Confidentiality and information protection
• Expert management from offer to closing

Partner with a Columbus CRE Broker You Can Trust

Selling your commercial property takes time and experience, and it can be stressful if you don’t have the resources to get the job done. DRK and Company offers brokerage services to simplify the process so you know the fine details will be ironed out. Contact our team to learn more and schedule a consultation.