What to Know When Selling a house As an Open Listing Or As a Sole Agency Listing
When you decide on selling a house through a real estate agent you will be faced with the decision to list your house with several real estate agents, this is called an ‘open listing’ or you could list your house as a ‘sole agency’ or ‘exclusive’ listing. The decision you make about which option you’ll choose will have quite a large impact on the entire sales and marketing program when selling a house.
In this article we’ll explain what is involved with listing a house as an open listing as well as a sole agency listing and we’ll explain the pros and cons of selling a house using both methods. The method you choose could affect the final selling price of your house and the time that your house is on the market for, this is why it is essential that you firstly have the right information in order to make a decision and then assess which method will work best for your house and your personal situation.
Selling a house as an Open Listing:
An open listing gets its name from the fact that when you list your house for sale as an open listing you ‘open’ the listing up to multiple real estate agents from multiple real estate agencies to allow them to represent your house as the sales agent. With an open listing you’re not tied into using only one real estate agent for a set period of time as you would under a sole agency listing.
Each real estate agent will have their own database or contact list of buyers that are looking for specific types of houses and if your house matches the requirements of one of their existing prospects, it could result in a sale. It’s only natural that the more agents that know about your house, the more number of homebuyers that could be inspecting your house. However, open listings will never get the full attention or service from the agents as it would if your house was listed as an exclusive-agency listing.
One important tip here: With an open listing all the agents will want to put up a for sale sign in front of your house so that they can increase their chance of receiving sales enquiries off the sign. Never have more than two For sale signs (from different agencies) in front of your house. If you have any more than two signs out the front of your property it could appear to be a ‘distressed’ property (one sign is ideal). A ‘distressed’ property is one where the vendor is in desperate need to sell. This could be because the house has been on the market for so long, the price could be too high or there could be something wrong with the property or the area in which it’s situated. Having too many agent signs out the front of your house could make it appear to be a property in distress and this could affect your end selling price and even the buyers first impressions when they drive past your house.
Listing your house as an open listing may also result in having to spend less money in advertising. This is due to the fact that there are a lot of agents that may have buyers already interested in the type of house your offering as well as the fact that you might spread some ads over several different agents over several weeks.
If you do have an open listing and intend to begin an advertising campaign to sell the house, it’s important that you have one ‘lead’ agent for your advertising. Do not place an ad one week with one agency, then run an ad the next week with another agency.
If you place ads with more than one agent it could appear that the house is in distress and that you’re advertising with anyone who will take on your house to sell. Also, buyers will call several different agents about houses advertised and if your house is advertised with several agents you will be wasting your money.
Open listings will generally suit properties that are low to mid priced for the area in which they’re situated. This is due to the fact that more expensive houses or more unique houses attract a more discerning buyer, or to put it more simply, a more targeted buyer. And therefore mid-priced to expensive houses are better suited to sole agency listings.
An open listing can work in your favour especially in a boom property market when houses are selling quickly as we’ve seen in the recent property boom in Australia around 2002-2004. When there are few houses for sale, this forces agents to focus more attention on selling what is available and therefore will increase buyer activity on your house. In quieter times, you may need more specialist attention and more targeted advertising in order to attract the right buyer, this is where a sole agency listing applies…
Selling a house as a Sole Agency Listing (a. k. a Exclusive Agency Listing):
With a sole agency or exclusive listing, you have one agent/agency representing your house for sale. Sole agency listings work especially well with mid range to expensive houses due to the fact that the higher the selling price, the less people there are that will be able to afford the house. As a result you’ll need a more targeted advertising program as well as more personalised attention that a sole agent can provide.
Real estate agents will almost always emphasize a sole agency listing to homeowners selling a house as the agent gains exclusive rights to market and sell the house which promotes their name and their agency name, the agent receives a higher commission and they have less competition from other agents.
If other agents have buyers that want to buy your house they cannot approach you with their buyer in an attempt to sell the house. Other agents need to make contact with your sole agent and ask if they will do a ‘conjunction’ on the sale. A conjunction on the sale of a house is where one real estate agent shares the sales commission with another agent at a predetermined percentage, usually 50/50.
With a sole agency listing you’ll have a dedicated advertising program that will be set out from the moment you decide on which agent you choose to represent your house. The agent might start out saying we’ll advertise the house in this way and at this price for three weeks running then we’ll assess the type of buyers we’re attracting and make changes if necessary. Using different headlines, copy and pricing in your ads will attract different buyers.
For example, if a house has a particularly large backyard, you would be best to market the house as a family house provided the rest of the house suited a family ie. Quiet area, spacious house, adequately fenced, away from main roads etc. If the house requires very little maintenance and is near a CBD, you would be better off promoting the house to single people or young couples. You know your house and suburb better than anybody and will be the best person to make this type of decision.
Your advertising will generally promote your open house on a Saturday and this is where you’ll attract the majority of buyers. Open houses can attract good numbers of buyers through your house and this increased activity can do wonders for buyer interest. If you’re having an open house make sure you hide any valuables from sight and put them in a safe, secure place that no one would look for them.
As there is no definite answer on whether you should sell your house as an open or sole agency listing please use the above purely for information purposes to make sure you weigh up your options and decide on the method that best suits you personally, your house and the area where the house is situated.
Matt Adams is Author of the book: “9 Secrets to Sell Your house For More in any Market”. In his book Matt shows homeowners how to quickly and easily sell their house for the highest price in the shortest possible timeframe, it’s so simple, anyone can do it.