Using an open listing can be a great way to use competition among multiple real estate agents to your advantage, but it can also have significant downsides. Here are some of the most frequently asked questions about open listings.
Competition is one of the driving forces behind the economy, so it’s only natural that homeowners might be interested in using the power of competition to sell their home.
When you sell your home using an open listing, you tap into a potentially unlimited number of agents, all competing with each other to find a buyer and claim that commission. But while an open listing is the easiest way to turn your home sale into a cutthroat competition for realtors, you might be surprised to find out it isn’t always the best way to get the highest price for your home.
Let’s answer some of the most frequently asked questions about open listings, and delve into their pros and cons.
What is an open listing?
An open listing is when a seller decides to sell their home themselves, as a for sale by owner (FSBO) listing, but also opens the home up to multiple real estate brokers. In this arrangement, whichever real estate broker brings in the eventual buyer gets paid a commission.
Even if a broker does bring in a buyer, the seller is only paying them as a buyer’s agent meaning they probably only have to pay around 3% in commission instead of the traditional 6%. This potential savings is usually why sellers go with an open listing, though it doesn’t always work out so smoothly.
What is the difference between an open listing and an exclusive listing?
With an exclusive listing, the agent the seller works with has the exclusive right to sell that property. No other agent can sell the property, including the owner.
With an open listing, it’s essentially “open season” on the property. The owner can enlist as many agents or brokerages as they desire, and all the enlisted agents would be competing with each other to find a buyer and get the commission.
Does an open listing need to be in writing?
All real estate contracts need to be in writing, so they can be enforceable. There are some legal precedents in which a court enforces an oral real estate agreement, but to do so takes time and resources while it’s litigated in the court system. And even then, it’s far from a sure thing. To avoid this complication, make sure your listing agreement is in writing.
Can a seller terminate a listing agreement?
Yes, a seller can alwaysterminate a listing agreement. However, they may be responsible for cancellation fees, depending on the terms of the original listing agreement. Always consult the fine print so you know what your obligations are.
This shouldn’t be a concern, however, for a seller using an open listing agreement. Since this open arrangement uses multiple agents to find a buyer, all of whom are competing against the others, there’s no exclusivity to cancel.
What is the difference between exclusive right and exclusive agency to sell?
An exclusive agency listing means the broker represents the owner, but the owner still has the right to sell the property themselves, without paying a commission to the broker. That broker can also partner with another brokerage to find a buyer; if a buyer is found through this arrangement, the seller would be responsible for paying a listing commission that will be shared between both brokers.
An exclusive right-to-sell listing gives a broker the exclusive right to find a buyer for a property. This exclusivity applies even to the owner, who isn’t allowed to find a buyer themselves under this setup, unless an explicit exception is made in the listing agreement.
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Can you have more than one real estate agent?
Yes. An open listing is the easiest way to work with multiple real estate agents, although you should consider that more isn’t always better. If you work with multiple real estate agents, their motivation and loyalty to you might not be very high. On the other hand, if you work exclusively with one agent, they’ll have the confidence that comes with knowing they won’t have the rug pulled out from under them by another agent, and will be highly motivated.
Working with multiple agents can make sense in a very hot market, but it’s usually a better idea to work exclusively with a single agent.
What is a pocket listing?
A pocket listing is essentially the polar opposite of an open listing. Whereas an open listing is totally open to being sold by multiple agents, plus the owner, a pocket listing is unlisted and essentially secret, kept in the “pocket” of a single agent. That agent will work quietly to find a buyer for the property, keeping it out of public view.
Why go with a pocket listing? If you’re unsure what price your property might bring, a pocket listing is a quiet way to test the market. It’s also very private, if you don’t want the neighbors to know you’re selling. And if you don’t list on MLS, no one will know if your property ends up taking a long time to sell.
If you’re looking to sell, using an open listing and enlisting the help of a whole pack of agents isn’t always the best strategy. Working with a single, experienced real estate agent is always going to be the best way to extract maximum value from your property investment.
Clever Partner Agents are top performers in their markets, and are highly motivated to help you sell your home. Not only that, they offer a full-service selling experience for a low, flat fee. Intrigued? Contact us today for a free, no-obligation consultation!