Below is an interesting article abstract from The Straits Times in 1988. I think it still apply in today’s market. Enjoy.
An OPEN listing is when the seller of the property has to pay a commission to the broker who made the sale, but the seller reserves the right to sell the property on his own without paying a commission. Open listings may be given to any number of brokers on the same property.
An EXCLUSIVE right to sell agreement is a listing agreement whereby the seller is obliged to pay a commission to the broker with exclusive right to sell a property during a stated period, even if the owner makes the sale himself.
Some owners prefer the open listings because they believe the property will be sold more quickly when several brokers, rather than just one, are seeking buyers. Open listings is also favored by owners who hope that they will be fortunate enough themselves to find buyers and thus be able to save on the commission.
Some brokers prefer the open listing because they do not want the obligation to spend time and money in trying to make a sale that is implied in an exclusive right to sell contract. Such brokers prefer to build up a large file of open listings and wait for buyers to take the initiative in seeking properties they want to acquire.
They will often take a listing at any price regardless of the current market conditions. Their policy is to wait for an offer – any offer – for consideration by the owner. There broker are reluctant to accept responsibilities. They want to avoid hard work. Hey are content to drift and wait for buyers to turn up and make offers. The disadvantage to the seller is that a considerable period of time may elapse before the property is sold.
The professional broker will prefer to work on exclusive listings. The following reasons why property sellers should consider giving broker the exclusive right to sell.
- EXCLUSIVE agency is the only way a real estate broker can serve his client properly. Would you rather have 10 lawyers represent you in a law suit, each working independently of the other? It is better to be represented by one agent then to be misrepresented by a dozen.
- YOU would have the right to demand proper attention to the sale of your property. From a dozen brokers, you have no right to expect anything.
- AN AGENT working only on exclusives can give each property proper attention and can afford to advertise it. He is more likely to effect a sale and at a better price.
If you would look to one agent only, you would know that he is advertising your property properly and that he can offer it freely in the best channels and in the best way to attract buyers because you and he would be protected against piracy.
“Too many cooks spoil the soup” This is especially applicable to the sale of real estate. The present irresponsible freelance system only means an enormous loss of time and money. With an exclusive agency, you avoid the possibility of being sued for commission by brokers you had forgotten you have listed your property with. A competent and self-respecting agent would rather list 10 properties exclusively rather than 100 in a slipshod manner.
If your property is one of the 10, your chance of selling it, at a good price is better than if it is one of the 100. Some owners fear that an exclusive agency may prevent them from selling their property through some other source. THIS IS A MISTAKE. Any conscientious exclusive agent would be willing to serve his client’s best interests, even if it means dividing his commission with another broker who may have a customer. The owner can and should keep his agent advised of all enquires he may get, and work with him.
If you expect a broker to protect you, you should, as a matter of fairness and reciprocity, be willing to protect him by making him your exclusive agent.
Concentration applies to real estate business as to any other. You should, in your own interest, concentrate your business on one good brokerage firm, which in turn will give proper attention to your property. The agent would also save you the annoyance of dealing with any Tom, Dick and Harry.
If you’re looking into selling your property, feel free to give me a call. I’m always looking for business.
Credit – Straits Times