The phone rings. I answer it. The person on the other end says “Hi Michael. My name’s Alison. My husband and I are selling our home and already have a Realtor we like and trust, but we have a few questions about some things we discussed and we’d like to get your take on them before we sign on the dotted line.” I seem to be getting more and more of these calls. Apparently I’ve changed careers and am now a real estate consultant. I’m always the last to know.

Truthfully, I like to help almost anyone and everyone pretty much all the time. I’ve gathered a lot of experience and expertise over the past 27+ years in the business so if I can share some info that’ll make buying or selling easier for someone, I’m happy to oblige.

One of the questions I’ve been getting with some regularity is: “Our Realtor wants us to sign an exclusive listing agreement before we sign an MLS listing agreement. They say it’ll allow them to try to sell our home before it goes on MLS. Should we do it?”

Let’s first compare the exclusive agreement to the MLS agreement. Look at the photo of the agreement that accompanies this post. At the top of the agreement are two circles. One is for an exclusive agreement and the other is for an MLS agreement. You initial in one of the two circles depending on the type of agreement into which you’re entering with your Realtor. That’s the only actual difference between the two types of agreements. The remaining terms of the agreement are identical regardless of whether you select an exclusive agreement or an MLS agreement.

In reality, the two agreements are not at all the same because they provide vastly different levels of exposure to potential buyers. An MLS agreement requires your home to be uploaded onto the Toronto Real Estate Board’s MLS system where it will be exposed to all 50,000+ Realtors who are members of the Board plus each and every buyer client of these Realtors. It will also be automatically uploaded on the nationwide real estate listings website accessible to all members of the public.

Your home will not receive anywhere close to this kind of exposure with an exclusive agreement. It may receive selective exposure by way of your Realtor putting a sign on your lawn, possibly a Coming Soon sign, or emailing the Realtors in their office or in their database. They may even upload it onto an exclusive listing website, but that website isn’t available to all Realtors and their clients. Or they may decide to keep it quiet and try to find a buyer themself and earn double the commission.

Given that you want as much exposure to potential buyers as possible when you’re trying to sell your home for top dollar, under what circumstances would a seller sign an exclusive listing agreement? I can think of two.

The first instance is when a seller isn’t very motivated to sell and doesn’t want to be inconvenienced with having showings, etc. In these cases, the seller might tell their Realtor “I’ll sign an exclusive agreement for $2m so if you find a buyer willing to pay that give me a call, but I don’t want anyone coming into my home.” In these cases, the price is often unrealistically high because the seller is happy to stay put unless they receive a certain price. If the seller really wanted to sell, they’d sign an MLS agreement to get maximum exposure to potential buyers.

The second instance is what Alison asked me about. Her Realtor asked her and her husband to sign an exclusive agreement before their home was ready to go on the market. This was to be in anticipation of them signing an MLS agreement which would supersede the exclusive agreement when their home was ready to be listed on the MLS system (when they were ready to sell, the timing was right, all cleanup, repairs and staging were completed).

I don’t know how all Realtors work so I don’t know how often clients are asked to sign exclusive agreements under these circumstances, but I’d say it’s fairly usual. I do it myself for two reasons. First, let’s say my clients contact me in May about putting their home on the market in September. I might receive a call from another Realtor during the summer asking me if I know of a particular type of home for sale that isn’t on the market yet. If this happens, we may be able to sell my clients’ home for a very good price without them having to do a lot of prep work and having to live with the inconvenience of showing appointments. It’s possible this might happen, but frankly, it doesn’t happen all that often. The more likely reason a Realtor would ask you to sign an exclusive agreement in anticipation of you signing an MLS agreement when your home is ready to go on the market is to protect the Realtor from you selling your home to a neighbour or co-worker before signing on with the Realtor or from you deciding to list with another Realtor. Once you’ve committed to a Realtor, that Realtor starts to spend time, effort and money in preparation for listing your home on MLS and wants to be protected. After all, Realtors are humans, too, and don’t want to have their time wasted. I don’t see anything wrong with that. It’s just good business sense, which is why I ask my clients to sign exclusive agreements in these circumstances.

And when I do ask clients to sign an exclusive agreement, I’m completely transparent with them. I tell them it’s more for my protection than it is to sell their home before it goes to market. (Frankly, I think they’re better off going the MLS route so they get maximum exposure to potential buyers because that’s the best way to sell for the highest possible price. I don’t recommend they sell without MLS unless a buyer wants to pay them an exceptionally good price.) If your Realtor talks only about the potential to sell without MLS when he asks you to sign an exclusive agreement, you might want to ask yourself if there are other things you’re not being told and if you can really trust them.

As always, I’d be happy to talk to you about your options if you’re thinking of buying or selling in the near future. Also, if you know anyone who is interested in learning how the market works and would like to receive the kind of help that involves honest answers, straightforward advice, no pressure and being treated like family, please let me know the best way for me to connect with them because I’d like to offer them this kind of help. And as always, don’t be shy if you have any questions or comments about this post! Thanks for reading.