Thomas Demsker, a New York City broker with Prudential Douglas Elliman, posted a great example of what happens when a seller goes the open listing route. Read the entire post on his blog, The Upper Crust.
The Buyers:
As a buyer, how do you decide which of the 9 ads to call? In this instance, the said property is listed by 9 different people in the same advertising medium, New York Times Online. Nearly all have different descriptions and photographs. Does this hurt the consumers perception of real estate brokers/agents? Does it hinder your home search?
The Seller:
As the seller, who is obviously a FSBO, why would you not work with an exclusive broker/agent that will represent your best interests? Has this worked for you in the past?
The Brokers/Agents:
As real estate professionals, what was your advice to the seller? Why would you take on an open listing? Are you working in a fiduciary capacity? How much time and effort will you devote to promoting/advertising this home sellers listing? Has this worked for you in the past? Did you find a buyer for the seller or a customer/client for another listing?
I’m sure there are many more questions that can be asked about the practice of open listings. Maybe some answers from those who have ventured down this route can help us all understand why it happens.
Anyone, Anyone?
Source: YouTube
Hmmm…Interesting post. As someone who’s tried to market 1 open listing, I have a little experience but not extensive. The open listing I worked on was for a $2.6 million dollar house in North Scottsdale. So it was definately worth a shot to find a buyer for it.
Advice that I gave to the seller…don’t trust lawyers. I took the open listing as a favor to a friend/lawyer and it was a large enough deal for me to benefit significantly if I sold it. The problem I ran across was that I didn’t want to spend my hard earned dollars marketing the home. I was more than willing to sit at an open house, post it on the mls/web or do anything that didn’t cost me a dime to market it. For most agents there is far too much financial risk involved to make that effort without a partial guarantee of payment upon the sale of the home. (This holds true especially in the average home price value where commissions are much smaller.)
Ultimately, I did not sell the home and neither did any of the other agents involved. The lawyer who asked me to help with the sale ended up buying the home for his personal use.
Bottom line…don’t deal with lawyers and it’s usually not a good idea to take open listings either.
As an Agent - Wow, I almost forgot about the Open Listing. Hard to think of it ever being worth while. It would depend entirely on what I felt my ROI could be. I’m sure I’d want to try a slightly different option where the seller could continue to try to get their own buyer but I would be the only agent (exclusive agency in Colorado)
Find out how he heard of an open listing (I’d never of told him) and why does he think he needs one. He’s probably been misinformed and needs to be enlightened. More likely though, he thinks he knows everything about real estate, knows that theres a chance with all the broker created buzz that he could get somebody directly and not have to pay an agent. No, I don’t think I’d get involved.
As for Buyers, I don’t think they care enough or would even notice that their was nine brokerages advertising a home. Buyers would call on the prettiest ad, whatever appealed to them, or whatever was at the top of the page. It would be a good time to put your picture next the ads unless of course it looks like you were beaten with an ugly stick…in that case a good name helps, bolded and centered.
Sellers? Well I don’t see the advantage there unless the seller had some sort of deal lined up himself that he felt might fall through. Might want a broker to start marketing it but not want to have to pay for what he already worked to put together.
incredible agent - thanks for the feedback. i can see how a $2.6 listing might make you take a shot with an open listing. but, did you have a written agreement w/ the seller or a handshake? unfortunately, i’ve seen a few too many handshake open listing agreements fall apart when the seller or other agent either said, that same buyer came through them first. you can imagine the arguments that ensued = procuring cause issues.
in nyc, a lawyer for your real estate transaction is pretty much a must. outside new york however, it does seem to be ok to conduct a closing without an attorney. you make a very valid point re: the financial risk that is involved when working with an open listing = out of pocket expenses with no guarantees for payment. although the chances are much higher with an open listing, an agent runs the same risk even if they had an exclusive. it happens. commissioned people always run the risk of hard work,no pay.
i wonder what the mindset of the seller who chooses an open listing is? is it ultimately an attempt to save money on a commission?
spencer baron - great points!
as the agent, you sure have a grasp on this unique scenario.
for buyers however, don’t you think it might confuse them? maybe they would think the seller is desperate by allowing anyone to advertise their property. this might be a signal to them to lowball an offer. some buyers may just steer clear of the controversy which doesn’t benefit the seller.
for the seller, i agree, don’t really see an advantage.
sellsius - I could see that. I really don’t see much benefit at all for a seller accept that he could screw the brokers out of the commission. Good chance the buyer would see all the listings and realize that the seller is cheap. Might not wan’t to deal with it or might just go straight to the seller.
Can you imagine how often disputes about procuring cause would come up if there were alot of open listings? It would be nightmare. Do they offer co-op’s in New York for this sort of listing? Can you even put an ‘open listing’ up on the MLS?
Denver’s Metrolist wouldn’t let you put it up on the MLS (Exclusive’s only). In Denver, most homes (80%) sell with a co-op agent. Seller would be just shooting himself in the foot not putting it on the MLS.
spencer - open listings in manhattan do happen but the agreement for compensation, whether written or verbal, is between the seller and the agents. i believe rebny, manhattan’s closest thing to an mls, allows exclusives only.
Really great information. Thanks for the post.
I agree with Incredible Agent.
I also took an open listing because of the list price, which was $2 million. Unfortunately, another broker found the buyer. That’s just the risk you take when you dont have the exclusive. That’s why I think only big ticket homes have “open listing appeal” Otherwise, it’s just not worth the effort. But now, if I took one, I think I’d put it on all the free sites and hope my ad catches an interested buyer. Most free sites don’t care about open listings.