Open listings vs exclusive listings

• If you’re planning to sell your property through a real estate agent, you’ll need to decide between an open listing and an exclusive listing.
• Each type of listing has its advantages and disadvantages.
• Find out how to decide which listing type is best for your circumstances.

When it comes to selling your property, one of the key things to consider is how you are going to list it for sale. Would you prefer to sell your home through a single agent, or allow many agents to market it at the same time?

We take a look at how each method works and the pros and cons of each approach.

Open listings

An open listing means you present your home to multiple estate agents and allow them to compete to sell your property.

You will only pay commission to the agent who sells your property.

Pros

• You are not tied to any one agent. Unlike in an exclusive listing, where you sign an agreement with an agent to sell your property, an open listing means you are free of any obligations except to an agent who successfully negotiates a sale of your property.
• Agents will be competing to sell your property, so it may sell more quickly. Agents will be keen to land the commission from selling your home and will be competing to find a buyer.
• You may have more potential buyers. Each agency will bring to the table their own list of potential buyers and it will broaden your property’s exposure, rather than you being limited to the list of one agency or agent.
• You can sell your property yourself. If you sell your property yourself, you won’t have to pay any commission.
• Agent’s commission may be lower because they will probably spend less time and money than they would with an exclusive listing.

Cons

• You may not get the price you hoped for because the agents are racing each other to find a buyer, not the best price.
• Potential buyers may see there are multiple agents marketing your property and believe it is hard to sell.
• Potential buyers may decide to negotiate with several agents and find one willing to offer you the lower price they have in mind.
• Exclusive listings on the agents’ books are likely to be given higher priority since there is a greater chance of earning a commission.
• Advertising and marketing the property could be left to you because the agents won’t want to commit time and money unless they are guaranteed a commission.

Exclusive listings

An exclusive listing means you list your property with only one agent for an agreed period.

With an exclusive listing, you sign an agreement with a single agent, giving them the right to negotiate a sale on your behalf – to the exclusion of all other agents – usually for anywhere between one month and one year.

Pros

• An exclusive agent is likely to put more time and effort into selling your property, because the possibility of earning a commission is much greater.
• A higher selling price may result from the agent having the time and confidence to seek quality potential purchasers rather than racing to be the first one with an offer.
• You can build a relationship with your agent. You will develop regular communication with your agent and they will keep you updated on who has been looking at your property and if there have been any offers. They will also advise on which offers to consider and which ones to let slide. Dealing with one agent is also easier than speaking with multiple agents.
• You may get assistance in preparing your property for sale. This could include advice on redecorating and temporary furnishings, and when the best times are for open house inspections.

Cons

• You may have to pay a higher commission than with an open listing, reflecting the agent’s higher investment of time and effort.
• It may be hard for one agent to find potential buyers willing to pay the price you want, especially If the market is slow.
• You are locked into your agreement with the agent. If you decide you want to change agents, you will have to wait until the current agreement expires, or possibly pay a fee to break the agreement.

Verdict

Choosing between an open or exclusive listing may depend on the current state of the market, the type of property you are selling and its location, the price you hope to achieve, and what the standard practice is in your local area.

Talk to people you know who have sold a property recently and ask them about their experience. If you choose to go with either type of listing but do not achieve a sale, you can always withdraw your property from the market for a while and return later to try the second type.