Exclusive or not? Does it matter?

Exclusive or not? Does it matter?

When selling my property, does it matter if I sign an exclusive agreement with an individual property agent to market my property or do I list it in the open for multiple agents to market my property? This is the question that many have asked when it comes to selling their property.

This article discusses the advantages and disadvantages of a open listing versus an exclusive agreement.

Exclusive Agreement VS Open Listing

i) Efficiency

The first factor to consider is efficiency. Do I want to just talk to 1 person marketing my property or do I want to manage 10 agents marketing my property. If you look at famous brands like BMW, they usually just engage a single distributor to market their products. Why do you think that is so? Well, the reason lies in the fact that it is relatively manageable to handle 1-2 distributor as compared to having to manage a handful of them coming to you for product information, queries and etc. In a world where time is precious, you might want to manage a single person who can do the job well. This is efficiency.

ii) Price Control

All property owners want to sell their property at a high price. When you present a price range for your real estate salesperson to work on, he would usually present the highest end of the price range for the buyer to negotiate on. Eventually, a price is reached which both buyer and seller are happy with. This is the case with an exclusive agreement with an individual agent. In the case of an open listing, with more than 2 agents, which end of the price range do you think each agent will present to the buyers? Naturally, if a group of agents are marketing the same property, the buyer goes to the one who can give the lowest price. Hence, it’s natural for all agents marketing this property to present the lowest price in the range so that he/she can secure the deal. An exclusive agreement comes with better price control.

iii) Motivation of salesperson

All property owners want their salesperson representing them to be motivated in selling their property. They want their agent to enthusiastically put up advertisements on all channels so that it gets more exposure, more offers and can quickly seal the deal for the owner. When it comes to marketing, this involves time and money on the part of the salesperson. Since an open listing is marketed by several agents and no one is sure who seals the deal, you can imagine how much effort each agent will put in. It is not rational for any agent to put in so much time and money into marketing a property that will not in the end earn him a sure commission. Each agent usually has a fixed budget for his marketing expenditure and you can be sure most of it will be spent on his exclusively assigned properties and any leftover from this budget, if any, will be spent on marketing an open listing.

iv) Exposure

How much exposure a property put up for sale will pretty much depend on the last point. An open listing generally doesn’t get much as it’s not rational for any agent to market a property that doesn’t give him a sure commission. As such, your neighbour, who is also selling his property and who has engaged an agent exclusively, will naturally receive more exposure on his property.

v) Lowest Price Revealed

Sellers do not want to reveal the lowest possible price to close the deal as they want a higher price naturally. With a handful of agents working on marketing your property and each competing with the rest to seal the deal, do you think the lowest price will be revealed?

vi) No room for negotiation

It is usually bad when there is no more room for negotiation. Imagine going to two stalls in a market for groceries. One allows you to bargain a bit more and the other doesn’t. Which stall will you go to for a good deal? When the lowest price is revealed, there is no more room for negotiation. A buyer looking to bargain will most likely feel that there is no goodwill offered and walk away.

vii) Loss of Potential Buyers

Point (vi) leads to this point.

To conclude, do we have to sign an exclusive agreement or allow many agents to market our property. There is no right or wrong answer. However, it may be more wise to go exclusive like BMW.


Leave a comment