What is a one-time showing agreement?
A one-time showing agreement is a real estate agent’s "hand-shake" agreement with a prospective buyer that usually appears in the form of a contract. The contract grants the buyer an exclusive right to view a certain property on at least one occasion for a period of time. The agreement is called a "one-time" showing because, at face value, the buyer is interested in only one transaction, and only for a limited period of time. It is most often used when an agent shows a home to a buyer as a favor to another agent , or when the seller does not want the property marketed beyond a single showing.
A selling agent may also believe that someone in his referral network would be a perfect candidate for a particular property. The agreement can also be structured to limit the buyers’ future rights on the listed property if they choose to buy it, but it does not adjust the commission rate, as the two parties already have an exclusive right of representation in their respective agency agreements.
Essential terms of a one-time showing agreement
The standard agreement begins with the basic information common to most contracts:
→ The name of the buyer and seller
→ The address of the property
→ The identification of the buyer/buyer agent and seller/seller agent
→ The agent’s company
→ The designations of the seller and any co-owner
→ The property type
→ The selling price
→ The terms of the agreement.
Because the deal doesn’t involve an MLS listing, it’s common for companies to have one-time showing forms that differ from standard state forms. Airbnb does this, for instance, as does TTR Sotheby’s International Realty, which has the document available in .PDF and .DOC formats. Agents should maintain firm-specific and standard non-compete forms for their company’s use.
The essential clauses of the LBP (Limited Brokerage/One-Time Showing Agreement) include:
- The agreement period—typically December 1 until April 30 or May 31. This means the agent will show the property until the end of April or May, depending on the date the agreement was signed.
- That the property’s owner permits the agent to show the property and reasonably safeguard the property and is responsible for any security damage in committing vandalism.
- If there’s an exclusive obligation for the agent to sell the property (as opposed to a non-exclusive one). This clause should employ the exact phrasing of the state law and/or company policy (stating "non-exclusive"), as failing to specifically say "non-exclusive" may obligate the agent to an exclusive obligation.
- Whether the individual is an owner or co-owner.
- If there are any contingencies that need to be satisfied to make this agreement effective.
- Any cost to be paid to the agent for the one-time showing.
- The percentage breakdown if there are multiple agents compensated for the sale (say, in a team scenario), if this is applicable.
- Whether the agents will be compensated if the property sells during the one-time period, even if the agent does not sell it.
- The percentage of commission.
- The sale price range.
- If the deal closes, when the commission is due (often upon ratification or upon settlement).
- If there are any penalties for early termination of the agreement.
- If the commission arrangement is exclusive to just the one-time showing or if it includes an exclusive listing period.
Some agreements also allow for an "extension" of the agreement where the agent can show the property for a period after the initial expiration of one-time agreement period.
Advantages of a one-time showing agreement
There are many benefits to using a one-time showing agreement. Most notably, a one-time showing agreement protects the real estate agent’s rights to a commission, and provides the seller with assurance the agent will be paid if they introduce the property to an unrepresented potential buyer. This is of particular importance in today’s real property market, as the recent economic crisis has broadened buyer’s options for homeownership and real property transactions. A "for sale" sign now garners as many phone calls from potential buyers who already have a real estate agent, as those who represent themselves.
By utilizing a one-time showing agreement, the real estate agent can introduce their client to the property, without having to worry about being compensated for their introduction. The one-time showing agreement is also beneficial in that it allows the owner and perhaps co-part-owner of the property to review the offer submitted by the homebuyers’ agent, and to either accept the offer or submit a counter-offer. Having this security in the sales process gives the owner the opportunity to determine if the buyer’s proposal is satisfactory. Whatever the outcome, this may save the commission that would otherwise be payable to the selling agent, if the owner were to deal directly with the self-represented buyer. By eliminating the risk of losing commission payments, the selling owner might consider opening negotiations with self-represented buyers before working through a real estate agent. In addition, a signed one-time showing agreement may provide protections and assurance to other interested buyers (represented by agents), evidencing to them that the listed property is protected by a one-time showing agreement.
Furthermore, the selling home owner can use the one-time showing agreement to protect their commission rights. Many owners of residential property are unaware of the risks involved with "for sale by owner" listings, especially in terms of compensation to real estate agents. A one-time showing agreement allows owners to control the negotiations for the sale of their property past the point of initial contact by prospective buyers and/or their real estate agents. This is beneficial to selling owners because it gives them the opportunity to identify the other individual(s) involved in the purchase of their property, whether in a joint venture or partnership. By protecting their commission rights, a selling owner may have the opportunity to bargain from a position of strength by controlling the negotiations with a prospective buyer.
Disadvantages
Despite the myriad of benefits that one-time showing agreements provide, they are not without their drawbacks. For instance, since such agreements are inherently limited to a single specific showing, they often result in some form of miscommunication or misunderstanding between the parties. This is particularly true when it comes to obtaining access to the property. As indicated, one-time showing agreements are sufficient to allow a prospective tenant to view the property; however, upon doing so, the prospective tenant may later change his or her mind about whether or not he or she wishes to sign a lease. If the prospective tenant takes this stance, the agent may be within his or her rights to refuse to accept another showing request from the prospective tenant until such time as the first one-time showing agreement expires.
Such a situation is more common then one might think, especially for properties that are rented out on an annual basis. Given the nature of such properties, prospective tenants are not just searching for a home, but for a home in a specific neighborhood amidst a limited pool of available rental properties. When they are being shown a property in which they are ultimately not interested, they may be less willing to consider properties all over town to find one that better suits their needs and taste. As a result, they may ask to reschedule without even considering other options. This puts the agent in the difficult position of having to weigh the merits of accommodating the prospective tenant against the possibility that refusing to do so could mar his or her reputation for being flexible and accommodating.
Another downside to one-time showing agreements is a lack of insight into the property itself. It’s easy enough for agents to communicate to the tenant the workings of and features unique to the property . On the other hand, things that they may not realize could be of interest to the client when showing the property for the first time could be overlooked. This makes a one-time showing agreement more appropriate for simple, straightforward transactions in which all parties are on the same page and nothing unexpected would occur.
It’s also beneficial to understand the cost-benefit of using a one-time showing agreement. For instance, they are usually less expensive than continuing to pay for a standard rental agreement, which usually covers three or four showings over a period of several months. On the flip side, one-time showing agreements do not always contain provisions that hold the tenant accountable to return for future showings or limit him or her in how many properties he or she can view. Thus, a prospective tenant may choose to take a second look at a property more than once or could even violate the terms of the one-time showing agreement that limits the number of showings of the property to only one. Such a violation opens the agent up to legal liability if the landlord or owner were to require such an action upon the tenant.
One-time showing agreements may also prove to be problematic for agents representing a property that has been marked as "vacation rental." Such property is usually located on different websites to receive maximum exposure. As most real estate agents know, such exposure does not always lead to a lease. Instead, the interested party may request not just one or two showings, but several. A one-time showing agreement won’t suffice and could force the agent to enter into new one-time showing agreements each time an interested party wishes to view the property.
One-time showing agreements should also adhere to state fair housing laws. Such laws prohibit rental and sales professionals from:
Agents who take it upon themselves to enter into one-time showing agreements when the tenant has a disability may inadvertently be violating those laws.
Drafting a one-time showing agreement
Once you know that a One-Time Showing Agreement is the right option for your situation, you will want to draft one that includes all of the necessary terms and is legally sound.
Talk to Your Broker
Your first step should be to check with your broker to see if they have a ready-made form for One-Time Showing Agreements. Many brokers have sample forms that are acceptable to use. If you do not have a sample form to use, or choose to draft your own, you can follow the steps below to create a legally sound agreement that you can use in your situation.
Use Templates
A One-Time Showing Agreement is a fairly common document, so you should be able to find a template for a One-Time Showing Agreement online. You can often find a One-Time Showing Agreement for free, but you should be able to get a professionally-crafted form for a small fee. A One-Time Showing Agreement, like a rental agreement, should include the following standard terms:
The above list is a standard outline of what a One-Time Showing Agreement will contain. You may need to revise the terms for your specific situation. For example, if you are showing a property with a real estate agent, you may revise the terms to note the agent’s fees in the agreement.
Work with a Lawyer or Real Estate Professional
While you can certainly create a One-Time Showing Agreement on your own, it is always a good idea to consult with a lawyer or a real estate professional to make sure that your agreement is legally sound. Any changes to the standard form should be checked to make sure they are valid under local, state, and federal housing law.
Frequently asked questions and misconceptions
Common misunderstandings and FAQs about one-time showings are listed below:
Can I use a one-time showing agreement if I have a contract on another property? There are "multiple contracts" showing agreements that are designed for listing agents with two or more homes for sale at the same time. So, the answer is "yes", you can use a one-time listing agreement or a multiple contracts agreement if you have a contract on a different property.
I don’t represent the homebuyer. Can I still use a one-time showing agreement with the other Realtor? The answer is "no". Under R.C. 4735.622-J , only the listing agent is permitted to use a one-time showing agreement.
How do I know how much to pay the showing agent? The typical fee is about $100 per showing. But the listing agent can offer more or less depending on how much they want to incentivize their home before it goes under contract, the listing agent’s experience with showing agents and how competitive your market is.