Real estate can often be bewildering to agents, brokers and potential buyers; due to all its varied daily terms in real estate transactions state and nationwide. A common term you might encounter during these dealings is “open listing,” if you’ve considered buying an available property or even selling one, you might have come across “open listings” and possibly wondering what this entails and its effect. No need for anxiety, though, as open listings refer to properties where the owner has agreed not to market exclusively with one selling agent but allows agents to market the property nonexclusively instead.
Brokers only receive fees if and when they find potential purchasers or tenants for your property – that way, the owner can ensure finding their tenant without incurring additional commission costs.
What Is An Open Listing In Real Estate?
According to the National Association of Realtors (NAR), an open listing is a contractual agreement under which the listing agent and/or representative of the seller or sellers of the property and the seller agrees to pay a commission to that broker only if the property is sold (and proven to be sold) through the efforts of the listing broker. That said, NAR also states that listings may not be excluded from MLS complications if there is any conflict or inconsistency in the process. That’s pretty confusing.
To simplify, an open listing is a non-exclusive contract with a brokerage (meaning it can be listed on any MLS anywhere) or several brokerages. A seller (home or property owner) could realistically list the home themselves as an FSBO (for sale by owner) listing while contracting several brokerages under a non-exclusive contract simultaneously. This would potentially lower commissions and maximize exposure for the person or persons attempting to sell faster. Depending on who you speak to within the real estate industry, one could argue open listings are how real estate should have always been structured, but we’ll get into that later.
How Do Open Listings Differ From Traditional Real Estate Listings
A traditional listing consists of an agent and a broker (for the seller). In this scenario, home or property owners do not reserve the right to find a seller or a buyer without paying a commission to anyone other than the agent and brokerage the seller contracted with. Basically, you are stuck with the agent and broker with whom you began your selling journey, as traditional listings must go through the agent (and/or broker).
In an open listing agreement, the “exclusivity clause” normally found in the traditional listing contract isn’t present, meaning the owner can list and sell the home themselves if they decide to. Another potential benefit: the owner can theoretically hire as many brokers and agents to sell and market their listing as possible.
Does It Make Sense To Have An Open Listing?
As intriguing as an open listing may sound, it isn’t the most utilized real estate sales avenue. Make no mistake; open listings are ideal for sellers who want to sell quicker and likely save on commissions. That said, many agents and brokers won’t even work with open listings because they believe it’s too much work for less of a guaranteed payday. Open listings haven’t become the standard because they ultimately put the commission terms in the hands of the seller as opposed to a single agent or broker. To compound this challenge, most MLS companies won’t allow open listings in their database because it is not solely represented by a single agent and broker.
Pro Tip: MyState MLS is one of few state and nationwide MLS companies that will gladly list a home or commercial property as an open listing.
How Do Open Listings Work?
Open listings are fairly straightforward for buyers and sellers, but here are a few points sellers and buyers should know:
- To begin with, when creating an open listing, the seller begins by contacting any brokerage or brokers and asking them for an open listing. More often than not, the brokerage or agent will reject the offer. Some brokerages will never offer or accept open listings. Locating one or two brokerages willing to work together may take a long time.
- The buyer then signs a non-exclusive agreement and will have agreed terms set out along with the commission.
- Remember, agents and brokerages are competing to make the sale. If a buyer contacts the seller, the seller could start the process of an FSBO sale, thus cutting the agent(s) out of the deal.
- Anyone who sells the property can receive the commission. The commission amount paid depends on the terms of the contract. Make no mistakes regarding that. The brokerage and agent who makes the deal will receive any compensation to pay for their work.
- Fortunately, MyState MLS not only accepts open listings but also offers the listing nationwide!
What Is The Difference Between Exclusive Rights & Exclusive Agency Rights To Sell?
These are two terms you may here often. They’re not exactly the same as an open listing. Some brokerages may lure the buyer into agreeing to one of these exclusivity clauses. If you plan to conduct an unrestricted sale, you may not agree with any of these clauses.
- Exclusive rights mean that only a single brokerage and agent has the authority to market your property. It is also not possible to sell your house by yourself.
- An exclusive agency to sell is when just one broker is permitted to showcase the property. However, you can consider selling the property on your own if you want to.
If Open Listings Are So Great, Why Aren’t Open Listings More Popular?
- Relatively high chance/risk of a commission conflict. Although less common today, home sellers sometimes claimed they met potential buyers after being recommended to them by agents before the meeting. There have been discussions as to whether agents deserve their full payment.
- Competition for the sale of that property is much higher. Not having another agent selling their home similarly would only add another step of complexity into this complicated process – most would rather avoid any unnecessary complications!
- There is less of a guarantee that the real estate agent will get a commission. While most people assume all their hard work will pay off when selling off a house, that doesn’t always happen with vacant listings; an agent could easily locate an interested buyer and receive a commission instead of having earned it from selling off the property.
- Commissions are often lower than average. For all their hard work, buyers may pay less than half the commission due to agents representing sellers – although this rarely occurs; nonetheless, it poses a legitimate financial difficulty to realtors operating with limited budgets.
- Sellers are less committed to the agent that sells the house (which makes sense because they were not the only agent involved). Finding payments among people who view your services as inconsequential can be tricky business.
Suppose you’re hoping to establish yourself as a major listing agent but aren’t sure where to begin to obtain listings. In that case, you will be interested in an Open Listings approach. Open listings are simple to obtain due to the fact that they are listings that are not exclusive contracts. They’re much easier to acquire than exclusive listings. MyState MLS lets you incorporate them into the Multiple Listing Service. The majority of local MLS’s don’t allow you to enter this information. Still, we can demonstrate how to accomplish this in MyState MLS.
