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When selling real estate, it is crucial to understand the three types of brokerage contracts available. Each contract type should be chosen based on the seller’s situation and needs. Here, we explain the features and appropriate situations for each type of brokerage contract.
1. General Brokerage Contract
The general brokerage contract offers the highest level of freedom for the seller, allowing them to request brokerage services from multiple real estate companies. This contract has fewer restrictions on contract duration and transaction methods, and registration with the REINS* network and progress reports from the real estate company are optional. This option is suitable for those who prefer not to rely on a specific real estate company or avoid REINS registration. It is also possible to terminate the contract mid-term. However, the seller must manage progress and communication with the brokers independently.
Suitable for:
- Those who do not want to rely on a specific real estate company.
- Those who do not know or trust any real estate companies.
- Those who wish to control their sales activities.
- Those who do not want to widely publicize property information (avoid REINS registration).
- Those considering self-discovered transactions.
*REINS is a network that allows registered real estate companies to exchange property information. Registering a property on REINS makes the information available to real estate companies nationwide, helping attract a broad range of buyers but also widely disseminating the information.
2. Exclusive Brokerage Contract
An exclusive brokerage contract involves engaging only one real estate company. The contract duration is up to three months, during which the real estate company must provide progress reports at least every two weeks and register the property with REINS within one week of signing the contract. Compared to a general brokerage contract, the support from the real estate company is more comprehensive, yet it still leaves room for self-discovered transactions.
Suitable for:
- Those who want to reduce the effort involved in the sales process.
- Those who have identified a trustworthy real estate company.
- Those who wish to receive regular progress reports.
- Those considering self-discovered transactions.
3. Sole-Exclusive Brokerage Contract
Similar to the exclusive brokerage contract, the sole-exclusive brokerage contract also involves engaging only one real estate company, but it does not allow self-discovered transactions. The real estate company is required to provide weekly progress reports and must register the property with REINS promptly. This contract type carries the highest level of responsibility for the real estate company, making it ideal for sellers who wish to delegate the entire sales process to a trusted company.
Suitable for:
- Those who want to reduce the effort involved in the sales process.
- Those who have identified a trustworthy real estate company.
- Those who wish to receive frequent progress reports.
- Those not considering self-discovered transactions.
Choosing the Right Brokerage Contract
The choice of brokerage contract depends on the seller’s preferences and situation. The general brokerage contract offers more freedom and multiple options but may result in less proactive sales activities from brokers. On the other hand, exclusive and sole-exclusive brokerage contracts, while limiting the seller to one real estate company, provide more comprehensive support.
Each contract type has its benefits and considerations, and the appropriate choice will vary based on the seller’s circumstances. Selecting the right contract method can lead to a satisfactory real estate sale.
