Is an Open Listing the Right Choice to Sell Your Home?
It’s time to put your house on the market. What’s your first step — after, of course, getting rid of clutter and improving your home’s curb appeal?
If you’re like most home sellers, you hire a real estate agent to list your most valuable possession. After all, agents have access to all the tools necessary to get buyers to look at your house. But what if there’s another way?
What if you can hire multiple real estate agents to sell your home?
With an open listing, you don’t sign with one real estate agent to represent your home. Instead, you sign with multiple listing agents at once. But this isn’t the right option for everyone, so it’s important to look at the pros and cons before deciding.
What Is an Open Listing?
To understand open listings, it can help to consider how real estate listings typically take place. The vast majority of real estate listings are exclusive, which simply means that the seller chooses one real estate agent. That agent does the work to promote the listing and receives a commission for those efforts.
With an open listing, though, a seller lets multiple agents work to sell their home. The agent who closes the sale gets the commission. An open listing agreement is a way for a homeowner who’s going the for sale by owner (FSBO) route to get a little help. If the homeowner makes the sale, none of the listing agents will receive any compensation.
Benefits of Open Listings
If you’re considering selling your home yourself, an open listing can be a great option. Here are some reasons you may want to consider going this route.
When you reach out to multiple listing agents, each of those agents will be incentivized to sell. That means you’ll get full access to that agent’s network of interested buyers. Chances are, if there’s someone in your price range looking for a home, each of your selling agents will bring that person to take a look at it.
This is in addition to any marketing work these agents do on their listings. With multiple agents sharing your home on social media and through targeted advertising efforts, you’ll reach more people.
When you go through an agent, that person gets a commission. Whether your coworker’s friend buys the house or a buyer’s agent seals the deal, your exclusive agent gets a percentage.
But with an open listing, whoever sells the house gets the commission. In 2020, real estate agent commissions averaged 4.94%, which means on a $500,000 house sale, $24,700 will go to paying the real estate agents involved. If you sell the house before any of those agents does, a commission may still go to the buyer’s agent, but there will be no selling agent’s commission.
The Power of Competition
A real estate agent wants to sell your home. That person only gets paid once the deal is closed, so naturally, that agent will be incentivized to get the word out. But most agents have multiple listings at all times, which means you’re battling for attention. For some agents, having to compete with other agents for an in-demand listing could incentivize each agent to work harder, especially if it ignites their competitive spirit.
“The only way I would ever consider this as a seller is if it were a competitive seller’s market,” real estate agent Erin Hybart said.
Cons of Open Listings
For all the upsides of open listings, though, there are plenty of downsides. Here are some cons to consider before pursuing the open listing route.
Not all agents will participate in an open listing. Many of the top agents may turn it down altogether. If you’re trying for the top agents in your area, hoping they’ll be able to sell your home fast, you might, in fact, find that the most in-demand agents will say no to non-exclusive listings.
Real estate agents who do agree to an open listing will likely require that you certify that you have no exclusivity agreements with other agents. The National Association of Realtors has a strict code of conduct when it comes to agents entering into agreements with clients who are already represented. Many individual real estate agencies will have similar rules and regulations.
Signing with multiple real estate agents means listings will come from multiple directions. This can confuse homebuyers. In some instances, buyers will reach out to multiple agents and work them all to get the best deal. Since you don’t have a single agent looking out for your best interests, you may end up making less on your home than you expected.
“When you sign an exclusive agreement, that agent represents your property and will be the proverbial team captain with all the other associated and affiliated processes,” said Nicole Beauchamp, a licensed associate real estate broker with Sotheby’s International Realty.
Lack of Agent Attention
Assuming your chosen agents have exclusive clients, how high do you think you’ll fall on their priority list? An exclusive agent is guaranteed a commission once your home sells, while agents in an open listing aren’t. That means you’ll likely be on that agent’s back burner, which could have you sitting around, waiting for someone to show your home.
“Open listings are like going to the ER,” Hybart said. “You get help from different doctors, but none know your case well. This can lead to fast but basic solutions. On the other hand, exclusive listings are like having a doctor who knows you and wants the best for you. In the same way, an exclusive agent will put more time and money into selling your home.”
3 Tips for Open Listing Your Home
Whether your goal is to get top dollar or sell a house fast, with the right approach, an open listing can work well for you. Here are some tips to ease the process if you do decide to open sell your home.
1. Prepare to Market
Open listings can be a great enhancement if you plan to sell your house on your own. In an FSBO situation, you’ll have the benefit of multiple agents hustling to sell your home as you put in work on your end.
That said, you’ll need to be prepared to do some of the marketing yourself with an open listing. As Beauchamp points out, an open listing means your home may not be posted on some key portals that require a listing be exclusive. Those portals may also prohibit you from listing the home on your own.
2. Have a Legal Backup
Agents play an important role in the home selling process. They handle the stacks of paperwork required. If one of your agents sells the home for you, you’ll get the same benefits you’d enjoy if you went with an exclusive agent agreement. But what happens if you manage to sell the home yourself?
A real estate attorney can help make sure your interests are represented. You’ll be signing legally binding agreements, so it’s important to be fully aware of what you’re agreeing to during the closing meeting.
3. Ask Questions
You have every right to talk to multiple agents when making a decision about selling your home. Whether you opt to use one agent or ten, meet with each agent and ask questions before choosing anyone to represent your home.
“It is important when meeting with agents that you have a clear indication of the range of services they will provide if representing your property exclusively — their fees and a clear explanation of their fiduciary obligations to you,” Beauchamp said. “Compare that to what the services and obligations are if you elect to go for an open listing.”
Alternatives to Open Listings
So you’re in a hurry to sell? An open listing isn’t the only option. Here are some alternatives that can help you move things along without the pitfalls that come with open listings.
For Sale By Owner
If you’re in a hurry and need to move soon, selling it as an FSBO listing could be the best option. Be prepared to show the house yourself and negotiate with buyers. You’ll also be solely responsible for marketing and listing your home. Sites like Zillow and ForSalebyOwner.com will let you list your home for buyers to find, but you can also reach out to your existing network on social media and use paid advertising to get attention.
Market and Advertise
If you’re in a hurry to sell, there’s no reason you can’t hire a real estate agent and still work hard on your end. Sit down with your agent from the start and come up with a marketing plan to make sure your efforts won’t conflict. You can still reach out to your network and help with marketing efforts while also enjoying the benefits of your agent’s connections.
An open listing comes with its benefits, but there are some issues to consider before you choose that option. Whether you work with one agent or multiple agents, meet with each one and outline what you expect. Remember, your agent works for you, so you have every right to ask questions about what the agent will do to sell your home.
Stephanie Faris is a professional finance writer with more than a decade of experience. Her work has been featured on a variety of top finance sites, including Money Under 30, GoBankingRates, Retirable, Sapling and Sifter.