Preparing Your Home For Sale

Many owners thinks that signing an open listing agreement creates competition between agents and is the best way to sell their property. 

 In actual fact nothing can be further from the truth.
The market generally believes that if an owner has a property listed with multiple agencies at the one time then the property may be over priced and difficult to sell.

This can translate into a reduced selling price. Think about your own experiences. What does it look like when a home has 4 or 5 different agency signs on their front lawn?

Remember that real estate agents do not get paid unless they successfully close a sale.  If a real estate agent receives an offer from a prospective purchaser he does so under the knowledge that another agent could present an offer to you at any time.

Answer these questions :

1. Can you be certain they will invest the required time to make sure the buyer pays the highest price for your home?
    
2. Will an agent rush the negotiations to lock in a sale if he knows somebody could beat him  and he earns nothing?

It must be pointed out that quite often you may not get the same amount of service from agents on an Open Agency Agreement and therefore it may take a longer period to sell your home. If a house has not sold during the agreed period it is likely that the price placed on it is too high.

Open Listings... how do they work...are they good for me?

An open listing as the name suggests is open to any number of agent's you choose.

It doesn't seem like a bad idea in the sense that you can sack any agent at any time if you are not happy with them. You only pay the agent who makes the sale and if you sell the property yourself you don't have to pay anyone!

The main problems with this method, and they are serious ones, are;

1. You will not have much chance of achieving the highest price, and
2. The agents will almost certainly make little or no effort to sell your home.
The reason an open listing can affect the price you receive is because, as in the Multilisting method, any buyer can now choose which agent they use to inspect your property.

Because the agent knows that other agents also have access to the property they too need to lure the buyer to use them, and in doing so may suggest to the buyer that they may be able to secure the property at a figure which sounds good for the buyer. Let's be a bit clearer.

Buyer asks... how negotiable are they?
Agent 1 says... look they are fairly negotiable, you'll probably get $10,000 off.
Buyer calls another agent who tells them the place is for sale as well and asks the same question. Agent 2 thinks... I want them to come to me so I can show them through...and says... I know they are keen to sell, I think you're in for a chance at maybe $15,000 less than what they are asking. Put that buyer's hat on again... Who are you going to buy through?

This is reality, it does happen.

Once again the buyer can check out all the agent's thoughts on a sale price and they will always choose the one that will save them the most money on the purchase.
The main reason for the lack of effort is that the agents will tend to focus more on selling the properties they hold as exclusive listings as it guarantees they will get paid.
With an open listing if you are not the selling agent you do not get paid a cent.

Essentially these systems create competition between agents, but unfortunately the seller is the loser in the cash department as the whole thing is now about the sale rather than the price!