Open Listings Vs Exclusive Listings
When you decide to sell your property, you’re going to be faced with many decisions. One of those decisions will be how you’re going to list your property; will you use multiple agents, or just one?
Finding the right real estate agent can be tough, so some vendors prefer having an open listing, as it allows them to work with multiple agents. Others will instead prefer to have only one agent to manage their property’s sale.
Both of these options are viable, and whichever option you choose should be based on what will serve your interests best. Here we weigh up the pros and cons of both Open Listings as well as Exclusive Listings, to help you decide which method of sale is best for you.
Pros and cons of an open listing agreement when selling your home
An open buyer agency agreement essentially means the responsibility of selling your property is distributed across multiple agents. When the property sells, commission is only paid to the agent who brought in the buyer.
Competition between agents
The agreement creates competition between agents, and heightens the urgency to sell.
More agents = more buyers
More agents representing you equates to more potential buyers. Each agent and agency will have their own list of potential buyers. They may also target different demographics, and be speaking to different people. Your property can be seen by all of these people at once, rather than just one agent’s contacts.
No sale = no commission
If your home doesn’t sell you do not owe the agent anything. You can also part ways with an agent with no loss or further obligation.
Sell your property yourself
You are free to market the property yourself as well. If you sell the property, you don’t pay commission to any of the agents.
You’ll only pay half the commission. Essentially, the agent is acting as a buyer’s agent (working for the person coming to you with an offer), so you only have to pay the ‘selling’ portion of the commission, rather than both the selling and buying parts.
Slow market is tough
Generally speaking, you are in charge of marketing the property yourself which can be a very difficult task, especially during a down market.
Rush to close
You may not get what you want for the property. This method pits agents against each other, so it becomes a race to sell your property. Because of this, the focus may be on finding a buyer to offer a price and persuading you to accept, rather than finding the best offer for you.
Open to manipulation
Potential buyers may see the property as an easy buy. If purchasers see your property is being handled by multiple agents, they’ll also see the opportunity to network their price and find the agent most willing to work within their boundaries.
Potential purchasers may interpret having multiple agents as a sign your property is difficult to sell, implying there is something wrong with it, or it’s overpriced.
Lack of focus
In most cases agents in an open contract in real estate will prioritise their exclusive listings over your open agreement. This means your property may be on the market for much longer than you anticipate, and in turn this may drive the price down.
Pros and cons of exclusive listing agreements when selling your home
In this situation, you grant a single agent and agency the right to sell your property. The real estate agent represents the vendor for all intents and purposes, and will work in the vendor’s best interests to get the best price possible for the property. A signed agreement will set out the length of time the agent has to sell the property – 30 days, 90 days, six months or one year - after which you can cancel their services with no charge.
You can build a relationship with your agent. Your agent will become someone you trust and get to know, and they will be working for you, rather than for the purchaser.
Collaborating with your agent one-on-one is much easier, as there’s only a single person to discuss details with. After finding an agent you trust, you’ll develop a relationship with them, and you will be in constant contact. You also have more control over the sale, as you won’t have to negotiate and deal with multiple agents.
Above and beyond
The agent will go above and beyond to ensure your property is ready for sale. This means marketing the property effectively and to its best potential, advising on when to open the property for inspection, and in some instances, bringing in experts to help furnish and decorate the property.
Priority service, higher sale price
The agency will put more resources into managing and selling the property. The agent is guaranteed their commission, so will prioritise the sale of your property. It’s likely you’ll get a higher sale price as the agent works for you, and will be trying to find the best deal, rather than the quickest. A single agent is also more likely to find quality offers, rather than bringing anyone to the table.
When there is a downturn in the market it can be much harder for one agent to find potential buyers willing to pay high prices. There may also be long periods of time without offers, and the productivity of your agent can come into question.
Commission charges can be much higher working with an exclusive agency agreement than with an open listing approach.
If you find down the track you do not like your agent and wish to switch, you’ll usually have to wait until the agreed sales time expires to change agents without incurring a fee.
Overall, with an exclusive listing agents are much more likely to be personally invested in the sale of your property. They will put in more work to find the right purchaser and the right price, and will be less concerned with just making a quick sale.
Frequently asked questions about open agency agreements vs exclusive agreements
Now let’s look at some faqs around the topic of open agency agreements vs exclusive agreements.
Is a multi listing the same as an open listing in real estate?
Yes, a multi listing is when more than one real estate agent represents your listing, which is exactly what an open listing is.
What does “exclusive right to sell” mean?
Exclusive right to sell is a clause you sign where you agree for a single agent to sell your property. This means you cannot sell the property yourself without paying your agent a commission.
Are open listings common?
Open listings are less common than exclusive listings, though ultimately you should decide what is best for your circumstances based on the current state of the market, the type of property you are selling, its location and the price you hope to achieve.
How long does a real estate listing contract last for?
The most common listing contracts in Australia are 30 day, 42 day (NSW), 90 day, six month and one year listing contracts. You negotiate the term of your listing contract with your agent, and there is no minimum or maximum set term. The fixed term will depend on how long you and the agent think it will take to sell the property.
What is a general authority in real estate?
General authority or General Sales Authority is when you (the vendor) appoints more than one agent to market and sell your property - as in an open listing or agency scenario.
In an open listing, who is paid the agent commission?
In an open listing you only pay the selling portion of the commission to the agent who made the sale.