Open Listing Versus Exclusive Listing: What’s the Difference?
Updated: Nov 6, 2020
When it comes to selling of properties, you will have to decide if you want to go with an exclusive right to sell, open listing, or exclusive agency listing. The latter is more uncommon in Singapore, and there are various types of agreements globally.
An open listing allows the owner to engage in as many agents that they want for the same property. The agent that manages to make the sale will get the commission, but the seller is not obliged to pay any of the agents if he or she sells the property by his own means.
On the other hand, an exclusive right to sell refers to an agreement to pay the agent a commission, regardless of the property being sold by the agent or the owner. A portion of owners prefer this type of agreement as they find that the agents are more ‘on the ball’ and responsible. This will allow them to sell their property quicker, despite having to pay a commission fee.
Pros & Cons of Open Listing Agreement
· No obligation to pay commission to any agent if the property is sold by the owner.
· Property will be exposed to more buyers as each agent has their own list of potential buyers. Compared to working with a single agent, this agreement will increase the chances of selling the property.
· With more agents competing against each other to sell the property, it would mean that the commission will go to the one that manages to make the sales. As a result, the agent will most likely find a buyer and push down the sales price, instead of looking for one that offers the best price to the owner.
· Agents tends to advertise at lower price to attract buyers so that potential buyers will not call other agents, this will jeopardise your ultimate selling price.
· Potential buyers might perceive the property to have some problems or that it is overpriced if they see the property being sold by multiple agents with different price.
· Agents tend to focus on their exclusive listings, if they have any, over the open listings. This will extend the time needed to sell the property.
Pros & Cons of Exclusive Listing
· Agents that are on an exclusive agreement are more likely to be more responsible and motivated to sell the property as they are guaranteed to get a commission.
· Exclusive agent will be more willing to invest in marketing and advertisements, without the fear of being "under-cut" by other agents or buyers.
· Higher sales price: the agent will also look for buyers that can offer a price that the owner wants instead of any buyer that is interested in the property and wants to ‘low-ball’. This is a result of proper attention being given to the property.
· Owner is able to build a long-lasting relationship with the agent and the agent can properly advise the owner on whether to accept or turn down any offers.
· Owner will have more control over the sales as they will only need to liaise with one agent.
· Commission has to be paid as long as the property is sold.
· Compared to an open listing, the commission fee for an exclusive listing will be higher.
For those who are looking to work with a dedicated and responsible agent, an exclusive listing agreement is the one for you. This will decrease the time needed to sell the property, and also reduce the trouble of you having to remember all the different offers by the various agents that you have engaged.
As the saying goes – “too many cooks spoil the broth”, when there are multiple agents working on a single property, the chances of fetching a good price for the property will be lowered. As a result, the owner will get a lowered profit, and yet still have to pay the agent a commission fee.
Most owners also have a misconception that selling through an exclusive agent will reduce the exposure of the property and therefore having to wait for a longer time before the property is sold. However, this is very much untrue as the agent is actually more committed to selling the property. On the other hand, an agent under the open listing agreement will be less willing to advertise the property as there is no guarantee that the sales will go to them. This will cause the property to stay on the market for a longer time than anticipated, and ultimately, the price of it will be driven down.
Just like employing an employee, you will definitely want to look for one that is hardworking and committed to the work. Likewise, it is better to sell a property under an exclusive listing agreement as a better price will be fetched, and the time needed to sell the property will be shorter, compared to getting an agent under an open listing.
William Lee / Eileen Au
Ideal Home is well-liked by both local and international clients for their friendly yet professional approach in the way it goes about helping them with their real estate goals in Singapore. They welcome the opportunity to have a no-obligation chat with you to see how they can help you to achieve your real estate goals in Singapore.
Contact us today @ +65 8666 4333 (William) or +65 8686 4333 (Eileen).