Tennessee Real Estate Practice Exam

What is the primary function of an Exclusive Listing Agreement?

1. Ensures multiple agents can sell the property

2. Prevents agents from negotiating the price

3. Establishes a sole agency for selling property

4. Limits the time the property is listed

The correct answer is: Establishes a sole agency for selling property

The primary function of an Exclusive Listing Agreement is to establish a sole agency for selling property. This type of agreement means that the property owner has chosen one real estate agent or broker to represent them exclusively in the sale of their property. This exclusivity not only provides the chosen agent with the right to market and sell the property, but it also ensures that no other agents will have the same authority to act on behalf of the seller during the term of the agreement. Having an exclusive agreement often leads to more focused marketing efforts since the agent knows they will earn a commission if the property sells. It gives the agent a stronger incentive to promote the property effectively and can lead to a more streamlined sales process. This is in contrast to other types of listing agreements, such as open listings, which allow multiple agents to sell the property, creating competition among them. In summary, the Exclusive Listing Agreement is essential for providing one specific agent the authority to sell the property, thus clarifying the seller's preferred point of contact and responsibility in the selling process.