Difference between an open listing and an exclusive agency
Open listing – Given to any real estate salespersons. However, the real estate salesperson may not be obliged to spend time and money to make the sale because no commitments have been made. They will slowly wait for offers by buyers and offer to the owner for considerations. Most of the time, the property will take a longer time to sell and at an unfavorable price. This is because many real estate persons may resort to undercutting prices so as to close the deal.
Exclusive Agency – Given the right to a particular agency to sell the property within an agreed specific period of time. This is to ensure that there is price control for the property without unnecessary price undercutting. Moreover, this will ensure that the real estate salesperson will put in time and effort in the marketing tools to get the best price for the owners.
Although many property owners doesn’t believe in this truth, and believe that by having an open listing, the owner would be able to sell his property fast.
REMEMBER : SELL FAST DOESN’T MEAN GOOD PRICE!!
Most successful real estate transactions are conducted through exclusive agency. This means appointing only one real estate agent to manage the marketing and sale/rental of the property. In Singapore’s context, this exclusive period is valid for three months upon signing the agreement. Let’s look at the advantages and disadvantages of such an arrangement.
Disadvantages of exclusive arrangement
Most of the time, it is because of ONE reason – Appointing the wrong agent.
- Disappear after the exclusive agreement is signed.
- No updates and returning of calls to the owner’s call.
- Did not carry out any of the activities that he promised the owner.
- Does not act in the interest of the owner.
Three months will pass by very fast and the owner ends up with an unsold unit. To make matters worse, the market has soften. The owner will feel cheated, angry and swear at using a sole agent and starts telling everyone not to do it.
Unfortunately, these things happen.
Advantages of exclusive arrangement
The established partnership gives the agent total confidence and trust to go ahead and market the property. He wouldn’t need to worry about the deal being closed by another agent. This will ensure full commitment and marketing effort.
- The appointed agent will keep the owner updated regularly of the marketing progress
- The only agent that the owner needs to talk to and hold him responsible for the property.
- The appointed agent will scan and qualify the buyer to ensure that the owner will not waste his time opening the unit to unsuitable buyers.
- Price is hold and controlled.
- Units that are marketed by multiple agents, many agents will quote the lowest price to attract buyers to call them. Thus, the agents are always pushing for the lowest price.
Usually, a buyer will call up many agents to find out who can get the best price (Lowest Price) for the unit. There might be ten different calls from different agents calling in to enquire about the property but only serve the same buyer or different buyers.
For the owner, would it be better to appoint an exclusive agent to make these buyers compete to offer at the highest price OR to make many agents compete among themselves to secure the lowest price?
Most of the buyers have an agent during viewings. The owner will still have to pay a commission to the agent if the deal is concluded. The owner might well appoint the RIGHT agent from the start to ensure that his interests are well taken care of.
Helpful tips
Pick the correct and professional real estate agent to work with on an exclusive to ensure a win-win situation for both parties.
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