If you're thinking about selling your home yourself, you're probably also considering an open listing. Open listings allow property sellers to work with multiple agents to try to find buyers, as well as look for their own buyers.
But open listings and For Sale By Owner sales have their drawbacks. Because real estate agents don't have exclusive rights to find buyers for the property, they don't put as much time and energy into finding buyers. And navigating the home selling process without an expert on your side can be a lot more complex than it seems.
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What Is an Open Listing?
An open listing is a non-exclusive real estate contract which allows more than one broker to sell a property, including the property owner. Sellers may use an open listing if they believe their property is easy to sell, or the market is hot and it won't be hard to find potential buyers.
With an open contract, the seller agrees to pay commission to whoever finds a ready and willing buyer first. Open listings also allow owners to sell their homes themselves, as a For Sale By Owner or FSBO listing.
An open listing allows the seller to save money on commission, paying just one broker instead of two. Typically, property sellers pay two real estate commissions — one to the buyer's agent and one to their listing agent, for a total of 6% of the purchase price. With an open listing, the buyer only has to pay the seller's agent, cutting the commission costs in half.
How Does an Open Listing Work?
With an open listing, a seller is usually looking for a buyer and also has brokers (often, multiple brokers) working to find a buyer. Open listings are a risky proposition for realtors, because no matter how much work they've put in, the first broker to bring in a buyer is the one who will get paid. Or the seller could find their own buyer.
People who decide to sell their homes FSBO often use open listing agreements and search for buyers on their own, in addition to working with one or more real estate agents. With open listings, agents typically don't spend money on marketing or advertise the property unless they're relatively certain that responsive buyers will contact them and not go to the seller or another agent.
Many real estate agents will turn down open listings, because they're unlikely to see any commission from the property. Agents prefer to hold out for exclusive listings, where they have the sole right to find a buyer for the property. Properties can sell as open listings, but agents provide limited services and show less interest.
Being the chief marketer for the sale of a home you've lived in can be a very challenging process. Having lived in a house, homeowners have difficulty seeing it objectively, without their attached memories. Potential buyers need to see themselves in your home, not you and your family.
Real estate transactions are complex, and if you're a first-time home seller, you should be very clear that you understand what you're getting into before you get too far along in the process. Realtors are able to use their expertise to navigate the often rocky waters of real estate sales.
What Are the Pros and Cons of Open Listings?
The biggest advantage to selling your house FSBO with an open listing is saving money on commission. The 3% you save by selling your home yourself is a lot of money. You could also end up with multiple buyer's agents looking for buyers for you.
Sellers may want to consider an open listing if they're in a hot seller's market, where demand greatly exceeds supply. If you have a solid property in a market where buyers are abundant, this option may make sense for you.
If you already have a buyer, you may not need a real estate agent. If your buyer is someone you already know, you won't need an agent to market your property or list it on the MLS. It may make sense to hire an attorney for a couple of hours to help with the paperwork, but that will likely cost far less than a real estate commission would.
As a FSBO seller, you're at a major disadvantage. Real estate agents are experts at selling property. They know how to navigate every step of the sale process, from staging and setting the right price to negotiating closing costs.
The vast majority of FSBO sellers lose more money than they save in commission. By selling without an agent, they leave themselves with no representation. They don't have an agent to help with home inspections and disclosures. They don't have exciting listings with professional photography and aerial tours.
Homeowners get excited about the of multiple brokers bringing in potential buyers.But because open listings aren't exclusive realtors don't like to put too much time or money into them.
Remember, agents aren't just bringing in potential buyers. They're also advising you on important matters throughout the selling process, including how to respond to offers, who pays for things like home inspections, and what kinds of taxes you can expect to pay. As novices, many FSBO sellers are bound to make mistakes that an experienced agent would avoid.
There are simply some things that are difficult for people who aren't real estate professionals to handle. Many property owners struggle with things like pricing, preparing paperwork, and selling within their expected timeframe.
Before you decide on an open listing, consider all of the options available to you. FSBO sales are seeing record lows. There's a reason that only around 8% of homes are listed FSBO — for most sellers, it doesn't make sense.
Considering Your Selling Options?
If you're thinking about doing an open listing, you're probably trying to save money. But it's likely that you'll end up losing more money than you save.
If you want to sell your home without paying the full 6% in real estate commission, consider working with a Clever Partner Agent. Our Partner Agents are experienced, full service agents who will sell your property at the fraction price, while giving you the same expert representation.
Clever Partner Agents work for a flat fee of just $3,000, or 1% of the sale price if your home sells for more than $350,000.
For a home worth $250,000, a seller will typically pay a 6% commission of $15,000, with $7,500 going to each of the buyer's agent and the listing agent. A seller who works with a Partner Agent will pay the buyer's agent around 3% and $3,000 to their listing agent, for a savings of $4,500.