What is an “exclusive listing?”
When does one occur? What are the pros and cons? Let’s take a look…
I have never had an exclusive listing, and I probably never will.
Why?
Because I see absolutely no reason why it would benefit my client: the seller.
Call me naive, or not a true salesperson, but I believe that my duties are to the client, and not to myself. I believe in doing right by the client, no matter what happens to my own compensation, with a goal of long-term success in this business. Yeah, yeah, I know, somewhere, a band of starving children is calling my name…
What is an exclusive listing?
Well, it’s what you might expect from the title – “exclusive.” It’s a listing where the listing agent/brokerage acts in an exclusive capacity on behalf of the seller.
It means that only the listing agent/brokerage may partake in the transaction.
To be blunt: it means that the listing agent/brokerage is NOT cooperating with other brokerages.
To be even more blunt: it means that the listing agent is hoping to “double-end” the transaction, and make a double-commission.
That is where some might take issue with my opinions.
I think the previous four lines were hard to argue with, but a proponent of the exclusive listing might disagree that the listing agent’s only goal is twice the commission, and instead argue that there are some advantages to the proposition.
I can’t think of a single one, to be honest.
When you sign a Listing Agreement as a seller, you have a choice between an MLS listing, and an exclusive listing.
Here is the top section of the form:
Check the left box if you want your property to appear on MLS, and have 35,000 Toronto real estate agents sending the property to their clients.
Check the right box if you want your agent to put a sign in the lawn, and have zero real estate agents inform their clients about the property, since they would not be welcomed into a transaction (ie. they would not be paid, and who in this world works for free?)
For all of you Realtor-haters out there, feel free to interject and say, “If you’re a buyer agent, and you’re working for your client, you should send them the listing for an exclusive even if you don’t get paid!”
Well, why don’t you work at your job for free for three months? Thought so…
Not only that, the property won’t even appear on MLS, so it’s not like any of the 35,000 Toronto real estate agents would know about the property anyways, unless they happen to be driving by the property.
MLS is the biggest development in the history of organized real estate.
It completely changed the industry, and changed the way we do business.
So why, exactly, would a seller forego listing his or her property on MLS, and instead opt for an exclusive listing?
I don’t know, to be honest. But they happen all the time.
I don’t see a single advantage to the seller in this situation, unless the listing agent has a pocket-buyer for the property, and the seller is a 90-year-old who doesn’t want a single soul coming through the front door of the property.
But in lieu of that single scenario, why would it not be more effective to give 35,000 cooperating Realtors an opportunity to bring a buyer to the property?
I found this graphic online, which perfectly describes the sales pitch that a listing agent would give to his or her clients while in search of an exclusive listing:
Perfect!
Imagine the agent, making this pitch.
“Mr. and Mrs. Seller, my goal is to sell your property, by being your sole representative. I will seek out buyers, bring them to your property, and assist you in this very important transaction. Bla, Bla, and might I add – Blaaaaaaaa!”
I currently have two listings, and I get “sign calls” on both of them.
Some unrepresented people will ask me to see the property, and 95% of the time, they say, “Thanks for your time,” and move on.
That says nothing of my inability to convert “leads” into sales, but rather the percentage chance that some complete stranger calls you off the sign and ends up buying the property that you have listed for sale.
Yes, I have sold properties off sign-calls.
But do I sell enough of them to necessitate an exclusive listing?
Absolutely not.
An exclusive listing would be a great opportunity for me to have a monopoly on the sale of that property, and seek out twice the commission.
But it would NOT be in the best interest of the client – the seller.
Thus, I have never had an exclusive listing.
A colleague of mine once had a listing up his sleeve, and I drove by the property one afternoon and saw a FOR SALE sign, from another brokerage, and the “Exclusive” sticker slapped across the sign.
I asked my colleague, “What’s going on? I thought you were getting that listing?”
“Oh, I am,” he said. “The seller is a guy on my hockey team. There’s no worries there. But he got some chick from another brokerage talking about how she had sooooo many buyers for the property, and how she could sell it if he gave her a 7-day exclusive. So, he did.”
“I don’t understand,” I said, since I was probably in my second year of real estate at the time.
“He’s calling her bluff,” my colleague said. “There’s no way that property sells exclusively. My buddy knows it’s a B- property at best, and the market is thin. But she gave him this whole song and dance, and this supposed ‘guarantee’ that she could sell it, so he’s decided to let her spend money on the floor plans, home inspection, marketing, etc., and after seven days, we’ll move on.”
Wow. How mean!
Or, how fair.
In that case, the exclusive listing didn’t turn into a sale, and my colleague listed the property two weeks later, and sold it about 20 days after that.
I’m not going to sit here and act like exclusive listings never turn into sales, but I think we can agree that they rarely do.
And even if they do, how does this benefit the seller?
I mean how does it really benefit the seller?
Other than that proverbial shut-in, old-man who doesn’t want anybody in his home, can you name a situation where ONE agent is better at selling a property than 35,000?
Sorry folks, but that question is rhetorical.
I don’t believe that an exclusive listing ever really benefits the seller, and I’d have a hard time being convinced otherwise.
I say this, with full knowledge that my industry colleagues, and even people I work closely with, all seek out exclusive listings so that they can get sign-calls and try to sell the property themselves.
I’m not a salesperson.
I’m consumer advocate first, hence this blog, and a salesperson second.
So when I see a topic like “exclusive listings” come across my desk, I’m going to discuss it, with full disclosure.
I’m curious to know what the public thinks.
Oh – and I’d love to hear from agents who have signed exclusive listings too. What are the benefits to the seller? I’m listening…
Ralph Cramdown
at 8:08 am
I think you’ve misrepresented the advantages and disadvantages of exclusive listings. I don’t think you actually believe everything you’ve posted here.
Except that bit about not telling your buyer clients about exclusives you might find out about — that I believe, even though it is in direct contravention of REBBA 2002 “If a brokerage has entered into a representation agreement with a buyer, a broker or salesperson who acts on behalf of the buyer pursuant to the agreement shall inform the buyer of properties that meet the buyer’s criteria without having any regard to the amount of commission or other remuneration, if any, to which the brokerage might be entitled.” Maybe if you’d been upfront with your buyers in the first place, instead of just saying your services were “free.” And worth every penny, I might add.
ScottyP
at 2:57 pm
So… in other words, you’re calling David a liar.
Harsh words from someone who reads and comments on his blog every day.
Ralph Cramdown
at 8:18 pm
Back to work, slave. And keep buying stuff; you deserve it! My dividend cheques don’t write themselves, you know.
ScottyP
at 8:55 pm
Great, now your replies aren’t making any sense.
At least you’re getting consistent….
jeff316
at 8:45 am
This is beneath you Ralph.
Chris
at 12:04 pm
I’m not convinced that it’s beneath him….
Appraiser
at 7:29 am
Ralphy loves to quote chapter and verse – it makes him feel intelligent and knowledgable about the business. Too bad he continues to live in shame, raising a family in a rental; while having to quiet his mother-in-law with stats from the the Fraser Institute on why.
moonbeam!
at 8:10 am
There are 2 houses on my street with “Exclusive” sings! by the same realtor!
Trevor Pereira
at 9:22 am
Bang on! I’ve been in the business twelve years and cannot get myself to do one either. Just not ethical in my opinion.
Donna
at 9:29 am
Hi, I agree that exclusive listing doesn’t have much of a benefit to the seller and not the same exposure. But this is the reason why some sellers go “exclusive”, because they don’t want that exposure, they don’t want people or maybe neighbors, or relatives or who knows who else to know that they are selling their home (I think these folks either are filthy rich or old). I’ve had one last year for 1 month. I brought 2 offers, but couldn’t agree on a price. The seller wasn’t anxious to sell, only if he got the money he wanted. I would not probably do this again.
Marina
at 10:05 am
There is a house that’s been up for Exclusive sale for the last 3 months in my area (Lawrence Park), on my street actually. While it’s been up, I think at least 10 other houses in the area have sold.
So yeah, can’t really see the benefit.
In this neighborhood houses sell! They sell fast. Unless they are in that dreaded 1.1 million range where they are too new to be a bargain, and too old to be new.
Three months is just ridiculous.
johnny chase
at 10:29 am
I’ve known a couple of vendors who gave exlcusives listing. The number one reason was to save on commisssion. Yes the agent double ends but he’s not getting 5%. He / She is getting 2.5% – 3% max. If houses are selling all around you and you list at fair market price, there is no reason it really shouldn’t sell.
David Fleming
at 11:21 am
@ Johnny Chase
True – commission is a factor.
But I still believe that in today’s market, a seller is insane not to go to the open market and get top dollar for the property, or in many cases, BEYOND top dollar; something that has a slim chance of happening without the benefit of mutliple offers from multiple cooperating agents.
ABB
at 10:35 am
It makes sense for a realtor who has a huge email list, or a very deep collection of buyer prospects in a targeted category, eg. families looking for 4-BR homes in a specific neighbourhood, etc.
David, can a listing agreement be amended to change from exclusive to MLS?
David, if it’s exclusive listing, does it keep the listing/selling price off public record? Perhaps some owners/vendors want to have as much privacy about their listing as possible.
David Fleming
at 11:10 am
@ ABB
To change from exclusive to MLS, it would have to be a mutual decision between the Realtor & seller. Although there could always be an agreement in advance, ie. you get the exclusive listing for two weeks, if you can’t sell it, then it goes on MLS for a 60 day contract.
Sale prices are always a matter of public record, and they’re always uploaded to Land Registry, regardless of the sale method.
Privacy could be a reason for the exclusive listing, but the FOR SALE sign always goes up on the lawn with that “EXCLUSIVE” sticker, as that is the #1 (and often ONLY) way for the agent to get inquiries.
Greg
at 8:07 am
“the FOR SALE sign always goes up on the lawn with that “EXCLUSIVE” sticker, as that is the #1 (and often ONLY) way for the agent to get inquiries”
This is simply not true. Many exclusive listings do not have lawn signs.
Now I do agree that exclusive listings typically do not make a lot of sense but every situation is unique. Consider my scenario:
1) I have a large property (180 ft of frontage and 1.8+ acres) on a fully serviced lot. Without any zoning amendments the property can be subdivided and easily hooked up to utilities already existing at the curb. In my area (Ottawa suburbs) such a severance can be completed in 3-4 months for ~$20k. All that to say that my property would be of particular interest to developers
2) Winter has just arrived and the traffic for general population of buyers (i.e. non-developers) is dropping off quickly
3) The interior of the house itself has some work I need to complete over the winter before I would consider showing it to those general buyers anyways. Developers could care less – the house is small (1200 sq ft) and if a developer was to buy the property the house would likely be replaced with something much larger.
4) The real estate agent I know is widely acknowledged to have the deepest and most developed contact list for developers in the area. It is why I chose him.
In this situation an exclusive listing where the agent can shop the property around to developers during the winter can make sense. And if that does not work by early spring, the property will be ready for viewings to the general public at which point it would move to be a non-exclusive listing.
Now I agree that my situation is very unique but it also represents a lack of imagination to say exclusive listings *never* make sense.
jeff316
at 3:33 pm
If you’re not needing to max the heck out of your sale price and you live in an in-demand area dominated by one or two high-profile agents, I can see exclusive listings being beneficial to the seller.
Addy Saeed
at 11:08 pm
I have three exclusive listings and mostly use them in Commercial Transactions. The intention is because public knowledge of these listing usually leads to a drop in business and a lot of sellers aren’t willing to take the risk when selling a property/business. Properties like apartment buildings usually see a drop in occupancy when tenants know that the building is for sale.
I have never taken an exclusive listing for residential properties as I don’t see value for the sellers in doing so.
The BeesKnees
at 12:42 pm
As someone else mentioned already, I’ve always assumed that it comes down to commission…if there’s not enough to go around then you try and get the job done yourself and still get paid for it! This time last year I lost buyers to an exclusive listing, that was a tough pill to swallow! It was for a piece of land that they’ll be building on so I bowed out gracefully for that transaction and when the time comes I will sell their current home.
I do think that in certain circumstances it can work without being detrimental to the selling client, hot neighbourhood or in-demand type of home etc…I can think of a couple of listings I had last year that it would totally have worked well for all involved! I’m in a different market though….
BB
at 4:24 pm
Very interesting article. I am looking for a condo and it is a specific address. A few units came up on MLS and I did see them but then they just disappeared off the MLS.. My real estate agent did not know why they disappeared. A few months later through internet searches on that address I found the units that I had seen plus another were now listed exclusively. I didn’t understand why I wasn’t told about them and my agent didn’t really understand why they were exclusive. I asked my agent to get me an appointment on one I didn’t see. She had a very hard time doing so. After many cancellations(not mine) I finally got to see it. I loved it but needed to see it again before putting in an offer. Never happened, cancellation after cancellation. I gave up. Never really understood why it was so hard to buy something that was for sale. Now there is another unit I would like to see that is in the building and is exclusive but not sure how to deal with it. If I’m reading this article right – 1. My agent won’t want to take me there as she will not get a commission and 2. The sellers agent won’t want to hear from me as they don’t want to share the commission.
Do I get rid of my agent and call the listing agent directly? That’s kind of nasty after all the work my agent has done. Any advice would be appreciated. I hate being in this situation.
Judy
at 9:36 pm
Hi BB,
How did it go?
Yes you’re getting it right. The reason why Sellers list exclusively is because they want to save one of the commissions (the Buyer agent fee).
This is what I would do if I were you:
1) Contact the listing agent and negotiate the fee for your buyer agent.
2) Let your buyer agent know the situation and tell your agent about the arrangement.
Joan
at 5:46 pm
I am not ready to move until I hear from the retirement residence that there is a place available. The exclusive listing is temporary, until I can move, and then it will go to MLS. I am not sure whether I am naiive, and that the agent will not sell, but just generate interest in the property. What do you think???
Treena
at 9:41 am
Your description of an Exclusive listing isn’t accurate. While an agent may ideally want to to double end it, it certainly doesn’t mean they don’t work with cooperating brokerages, and that a buyer’s agent wouldn’t get paid. The contract is the same as for an mls listing, and the seller can specify how much the cooperating brokerage is paid and can decrease that in the case of a double end deal.
I’ve used Exclusive listings in the winter with hard to sell listings. Clients want to have the opportunity to sell, without the listing going stale in a slow market. Should they not sell by spring then it hits mls. Often have used this when the listing hasn’t sold during the fall and they would like to relist in the spring. In no way does this mean I don’t want to work with cooperating brokers- only that the seller wants to take a break from mls until the market heats up again, without losing all opportunities to receive offers and have showings.
Neil
at 5:12 pm
I would assume an exclusive listing would be for half of the normal commission or about 2%. If you’re paying more, you’re an idiot.
Doug
at 8:11 pm
have property was for sale mls contract ran out realtor said he has a buyer want to give him 24 hr exclusive what commission do I give him ?does he have to pay mls? If I have some one interested do I have to pay him comission if I sell?
Diane
at 5:48 pm
How can I find out if a house is exclusive. I rent and I believe the agent is lying because I’ve had a few different stories from her and I believe she is having us move and renting the house for more. She keeps saying mortgage went up twice (2 Years) but our rent hasn’t. Something doesn’t seem right. She has only brought 1 person by and it was a quick can I come in and see which we said no.