Exclusive Agency Agreements: what Agents don't want you to know

Submitted almost 7 years ago by Alan Barry

There seems to be some confusion about exclusive agency agreement because people are believing what Agents are telling them


So I want to tell you about 2 things real estate agents don’t want you to know:

  1. Section 55   (No entitlement to commission or expenses without agency agreement) of the Property Stock and Business Agents Act 2002 No 66. This section clearly states no real state agent in NSW can get paid a commission without a signed written agency agreement. Please feel free to read this section here http://www.legislation.nsw.gov.au/#/view/act/2002/66/whole#/part4/div1/sec55 and other sections on penalties, fines and loss of license that can be imposed on an Agent if they try to extort commission from a Vendor.
  2. The only party that gains any benefit from an exclusive agency agreement is the Agent. The exclusive agency agreement guarantees the agent payment in all and any case even if another agent sells the property. How is this to a vendor’s benefit? If the vendor signs an open agency agreement the vendor gets to decide how many agents they wish to appoint, keep it exclusive if you wish by appointing only 1, but then if another offer does come along you are free to take advantage of it.

Consequences of Signing and exclusive agency agreement:

The vendor pays for all expenses whether it is an exclusive or open agency agreement.

In Australia, agents spread FUD (fear uncertainty and doubt) in the minds of vendors to get a free ride through forcing vendors to sign exclusive agency agreements. In other countries I have lived and owned property to get an exclusive agency agreement real estate agents have to pay by either paying for all marketing themselves or reducing the commission. If you as a vendor sign a non exclusive agency you get no benefit.

The vendor could pay double commission.


Only a really stupid real estate agent will try to sell your property on the open market without an agency agreement. However agents might get unsolicited offers that they may ask to present to you on condition you sign an open agency agreement first. If you want to accept this offer, after you have signed an exclusive agency agreement you would have to pay 2 commissions. So never expose yourself to the chance you might have to pay double commission by signing an exclusive agency agreement.

The vendor loses control of the sale when signing an open agency agreement and this can damage the property value.

Once you have signed an exclusive agency agreement you no longer have any means of putting pressure on an Agent to perform. Once you sign an open agency agreement you are in control of your destiny and decide how to market the property, how many other agents you wish to appoint and you can create competitive pressure to make an agent perform.

Disasters, cost and claims can result from an open agency agreement.

This is exactly the FUD argument agents use to get a free ride and get an exclusive agency agreement ,

Contact Alan Barry for more information on this topic

Search for properties

Share this page

02 8004 2470