Considered as one of the most prominent types of investment, real estate has preserved its rank for a long time as the most preferable choice to spend savings on. As a result of that, real estate marketing has always been a fiercely competitive industry. The real estate marketing methods are continuously evolving to keep up with the market changes and the customers’ expectations.
If you are a property owner who decided to sell their property, seeking the help of a realtor will usually be your first choice. And while this will probably accelerate the sale process, you need to know the differences between the two main real estate marketing methods - or listing methods, to be more precise - beforehand to know which will suit you better.
In this article, we demonstrate the pros and cons of both the exclusive listing method and the open listing method to help you determine which of them is the right method for you:
A. Exclusive Listing Method
Exclusive listing is one of the real estate marketing methods where a contract is signed between two parties or even more to deal only with each other. This type of agreements usually restricts the property owner from engaging in other activities with other parties. On the other hand, it requires the real estate broker to sell the property within a specific timeframe for an agreed-upon commission.
There are multiple advantages because of which exclusive listing stands out among the other real estate marketing methods:
1. Leave it to the professionals
If you sign an exclusive agreement with a realtor, this means they handle everything starting from the property promotion to the financial transactions when closing a selling deal. This will save you a lot of time and effort.
In some cases, the realtor might even know a potential buyer who is looking for a property with the same specifications that yours has. In this case, he will match both of you and the potential buyer and the whole selling process will be completed in a relatively short time.
2. Keep it Quiet
Another critical advantage of exclusive listing that is not offered by any of the other real estate marketing methods is privacy, although this could be subjective according to your personal needs and preferences.
For example, you might not want your acquaintances, friends or even relatives to know that you are selling this property for any personal reasons. While it is practically impossible to keep such news under the radar if you are using open listing, exclusive listing keeps the whole process only between those who need to know about it.
Also, more often than not, privacy is a critical factor for the owners of luxurious properties as they usually do not want any information regarding the selling process (the price, or even the fact that this property is being offered for sale) to go public.
3. Test the Waters
You might not want to sell your property right away; instead, your goal is just to know its current market value before putting it up for sale in the near future. If this is the case, it is best to go with exclusive listing.
This can also act as a fail-safe for you if you are planning to offer the property at a price that is higher than its market value; if you used the open listing method and reduced the price later, the realtors and the buyers will notice this and you will probably be forced into negotiating the price further.
These are the most important reasons why you should choose exclusive listing over an open listing. However, there are few downsides to this method that you should be aware of:
1. No Bidding
While the exclusive nature of the first method ensures you the privacy you need, it, by definition, means that you will not be able to await higher bids on the price and the offer you will receive is an ultimate one.
2. Dealing with one realtor
This might not be a disadvantage necessarily, but you will have to be careful when it comes to choosing the sole real estate agent you are going to deal with. Also, make sure that the period of time enlisted in the contract is convenient for you. You want to choose a reputable professional agent who would know how to advertise your property successfully to get a suitable offer while keeping in mind that the best realtor is not necessarily the one who requests the lowest commission.
B. Open or Multiple Listing Method (MLS)
The second of the main real estate marketing methods is an open listing method. Unlike the first one, this method doesn't restrict you to one realtor as you can recruit multiple agents to sell your property. As a result, this method has multiple advantages:
The nature of this method creates competition between the multiple realtors you recruit and urges them to find a good offer for your property that will beat the other realtors’ offers as quickly as possible. This also means that your property will be seen by a lot of potential buyers rather than the limited list of contacts that can be offered by a single realtor in an exclusive agreement.
2. No strings attached
You can end the agreement with your realtor(s) at any time without further obligations and without owning anything to the realtor.
3. You are your own marketer
Not only are you free to recruit as many realtors as you see fit, but also you can choose not to recruit any realtor at all and market for the property yourself which will save you the commission you pay for the realtor.
That being said, the nature of open listing can be a double-edged weapon in some cases, which brings us to the disadvantages of this real estate marketing method:
1. You are in charge
While this method gives you total control over the whole process of selling your property, it can easily turn into a burden if this is your first time to sell a property and you might either take too long to sell the property or end up accepting an offer that is less than the property’s real market value.
2. Buyers can tell
If the property was put up there for a long time while being handled by multiple agents, potential buyers will speculate that the property is either overpriced or an easy buy. This might end up reducing your property’s price below its market value or the minimal value you are willing to accept.
So what is the best real estate marketing method? Well, this differs from one property owner to another. If you are not an expert in the real estate market, it is best to use exclusive listing. However, make sure you are choosing an expert professional realtor to trust him with this process.