An open listing is a type of real estate listing agreement that is usually verbal in which the seller tells multiple Brokers/agents about a property they would like to sell but they do not want to sign an exclusive listing agreement. While this may seem like a good idea for a seller, as it may give the illusion of increasing the chances of finding a buyer, there are several reasons why an open listing is not recommended.
First and foremost, the idea that an open listing somehow gives the seller more exposure by offering it to multiple agents is completely false. Basically the open listing or "bring me a buyer and I'll pay your commission" approach will limit you only to the agents to whom you've actually spoken to.
When you list your property with a good, qualified broker/agent, your property will then be available to every other broker/agent via the Multiple Listing Service or its industry equivalent (unless you have instructed your broker to keep it private). This will bring awareness to literally hundreds if not thousands of Brokers and real estate agents.
Not only that, the property (if listed with an experienced Broker) will be marketed all over the web with professional photos, tours, and floorplans directly to potential buyers.
Open listings can also lead to confusion and a lack of communication between the different agents involved. Each agent may have their own idea of how to market and sell the property, and may not be aware of what the other agents are doing. This can lead to conflicting messages and a lack of continuity in the marketing efforts which is a great way to waste time and resources.
Additionally, open listings can also lead to a lack of motivation for the agents involved. If they know that other agents are also working to sell the property, they may not put in as much effort as they would with an exclusive listing agreement. When an exclusive listing is signed, the majority of the time, the agreed-upon commission is split between the seller's agent and the buyer's agent. This provides complete cooperation between the two professionals and equal motivation to get to a successful transaction as quickly as possible.
Another issue with open listings is that it may not be clear who the agent of record is. This can lead to confusion and disputes over commission fees, which can be a major headache for the seller.
Finally, open listings may give the impression that the seller is not "real" or committed to selling by working with a Broker/agent. That can discourage potential buyers from even making an offer. Buyers often want to know that the seller is committed to working with a particular agent and that the agent is committed to the property, which is not the case with open listings.
When a seller officially hires a Broker to sell their property it's usually a sign they are "all in" and not just testing the water to see what offers come in only to not sell at all.
In conclusion, while open listings may seem like a good idea for sellers, they can lead to confusion, lack of motivation, commission disputes, and a longer time on the market. Exclusive listing agreements are generally a better option for sellers as they provide clear communication, motivation, and a clear agent of record.
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