There are two different situations in which a real estate licensee (broker) might be involved in a listing where the number or identity of buyers might be limited. Both involve a homeowner who is either For Sale By Owner or who hasn’t advertised the home for sale at all.
Excluded Party Listing:
You are the homeowner and are selling by owner. I am a licensed real estate broker. I see that your home has been on the market for a long time and has not yet sold. I visit you with the goal of entering into an agency relationship with you, such that I become your listing agent who agrees to market your property so to find buyers.
You have been talking to Mr and Mrs X, and Mr and Mrs Y — each couple has expressed sincere interest in your home. If you end up reaching an agreement with either one of them, you don’t want to pay me a commission, because I didn’t bring either couple to you. On the other hand, you have been talking to each couple for several weeks now, and understand that it’s time to engage a real estate professional to help you sell your home.
So, we enter into a listing agreement which excludes these specifically identified Mr/Mrs X and Mr/Mrs Y from your obligation to pay me a commission in the event that the home is sold during the time period our listing agreement is effective.
One Party listing agreement:
It doesn’t matter, for purposes of this discussion, whether the home is for sale as a For Sale By Owner or not. Let’s say that a person B comes into my office; I am a real estate professional licensed broker. B has seen your home, either showing a For Sale By Owner sign or not; B thinks it’s a great house and wants to approach you about buying it. B does not however want to pay any commission to me. I don’t work for free :) So, I contact you and ask you to enter into a listing agreement involving just B as a buyer. If working on your behalf I am able to help you negotiate a purchase by B, you will pay me the commission you and I agree is fair. If we don’t succeed in selling your home to B, the listing agreement is over.