Sole or exclusive agency, open listing and Multi Listing
Warning, long post!
When you’re about to list your property for sale you can be forgiven for not understanding the differences in a sole or exclusive agency, an open listing or multi listing.
I thought I’d try and explain these and how an agent views and approaches each one so that you have a better understanding of them and why some agents are hesitant and often even refuse to take on open and multi lists.
In the case of an open listing, the vendor gets in 2 or more agents to list their property and whoever sells it gets the full commission. Vendors often think that as the agents are competing against each other to sell it that they’ll all be working much harder to get the sale so that they can get the commission, much like a feeding frenzy in a shark tank. In fact, the exact opposite usually happens.
When the property is first listed you’ll probably have quite a few agents trying to get their current buyers through the property for a quick sale and after a few days that’s the last you’ll hear from them. As they’re competing against other agents for a sale, any agent that has been around for a while will back off (if they even bother to take it on in the first place) as it’s more like a lottery. You can put in quite a bit of work only to be pipped at the post by another agent who gets lucky and gets the sale.
The agent will be less inclined to be trying to get you the best possible price too as all they want is a sale before another agent sells it and realistically, and who can blame them. The vendor isn’t being totally loyal to the agent so why would you expect the agent be totally loyal to the vendor in achieving their objectives.
Also, a buyer can ask for a list of addresses, go for a drive by them all, see another agents sign and call the other agent for any number of reasons such as, they’re closer, they know them, they can’t get hold of the agent that told them about it and they want to look then and there. Also, the buyer can knock directly on the vendor’s door and the agent that gave the address has no legal comeback.
And further, how do you decide which agent is going to do the marketing? And if you do decide to have one agent do the marketing, do you really think the other agents are going to try and sell it anyway? You may as well give one of them an exclusive agency.
In the case of Multi Listing (ML), ML is a form of sole agency. The agent that Multi lists the property gets 50% of the commission no matter which agent sells it.
What used to happen around here and I have no doubt the same happens in other areas is this. An agent may have had a sole agency or exclusive listing for a while and the time of the agency agreement is running out. The vendor will inform the agent that they want to ‘give it to all the agents’. The ‘nice’ agent offers to arrange that for the vendor by giving all the details to all other agents via the Multi Listing Service (MLS), knowing that he/she still has the best chance of selling it as most agents don’t bother about other agents ML properties.
The reason other agents don’t show it is, why the heck would they try and sell another agents listing when they’re only going to get half the commission? Also, as with open listings, the buyer may drive past the property and then see the listing agent’s sign and approach the listing agent. Again, a disincentive for other agents to try and sell ML properties.
Unfortunately, what can happen is, the agent doesn’t fully explain all the implications of the MLS. When the other agents in the area don’t even go and look at the property, let alone bring buyers through, the vendor unwittingly says that the agent that has ML the property is the best one around as they’re the only ones showing it.
Years ago, the company I work for withdrew from the MLS. Occasionally we’d get vendors that had ML with another agent come in and have a go at us for not coming to see their property. After we’d explained that we didn’t participate in ML and also explained the pitfalls with the system, they’d often go see their listing agent and have a go at them for not telling them the full story.
Although I believe it’s worked ok in some areas, generally speaking MLS is a highly ineffective way of marketing a property.
In the case of sole agencies or exclusive listings, the listing agent has some control over the listing and the marketing of the property. Also the vendor will have an agent that is 110% devoted to selling the property. At the end of the day when the property sells, the agent is going to be rewarded for the effort put in, not unlike any other person out there trying to make a living. This type of agency is mutually beneficial for all parties.
And if something goes wrong, or nothing is happening, you have one person responsible for selling your property. In the case of an open listing, which agent are you going to point the finger at if nothing is happening?
I hope you find this info useful.
Cheers
