For many homeowners, one of the first steps to selling their home is signing an exclusive agreement with a listing agent. This agreement states that the agent has the sole right to sell the property and excludes even the seller from doing so.
By contrast, an open listing is a home that is listed without an exclusive agent attached to it. The commission attached to it is free for any agent, broker, or even the seller to claim if they’re able to secure a buyer for the property. But this type of listing agreement comes with some caveats.
An open listing agreement is a legally binding contract between a seller and a listing agent or broker that is non-exclusive. In other words, the agent will list the property, but any agent or broker may win the commission by securing a buyer for the property.
Sellers are also free to find a buyer for their home under an open listing agreement. If they do, the seller doesn’t have to pay a commission to the listing agent.
Open listings are often used by for sale by owner (FSBO) sellers. FSBO is a relatively uncommon practice, accounting for only 7% of home sales in 2020. Open listings are a popular choice for FSBO because they often don’t require the expertise of a listing agent. Roughly a third of FSBO sales aren’t marketed at all, and almost a quarter are sold to friends, relatives, or neighbors.
However, open listings aren’t common. Finding an agent for these homes can be hard because there’s no guarantee that they will receive payment for their efforts.
To understand the difference between open listings and other types of listings, let’s take a look at some of the most common listing agreements:
Home sellers typically work closely with one listing agent throughout the process of selling their home. Homeowners and their listing agents work together to coordinate showings and strategize which offers to accept. Under an open listing, home sellers may work with multiple agents to find a buyer for their home.
This is the key difference between open listings and their counterparts: open listings are nonexclusive. As the seller, you’re not bound to an agent or brokerage. You’re free to play the field.
However, open listings are not permitted on the Multiple Listing Service (MLS) — a private database where brokers upload and share information about properties for sale — except where required by law. So open listings receive limited exposure and even less promotion since agents aren’t incentivized to market the home with a guaranteed commission.
To list their home as an open listing, homeowners can follow these steps:
This unique type of listing comes with some positive and negative aspects. Here are some to consider if you’re thinking about putting your home on the market as an open listing:
A traditional exclusive listing is the better choice for most home sellers. This type of listing will ensure that your home is listed on the MLS, gets the most exposure to potential buyers, and helps you get the most for your money.
However, an open listing may be the right choice for you if:
If you want to challenge the status quo when listing your home, consider using a power buyer. These companies, like Orchard, are utilizing technology to revolutionize the real estate industry and provide a fresh alternative to the traditional way of doing things. While their services differ from company to company, many can guarantee your home sale and turn you into a cash buyer for your next home.
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