✏️ Editor’s Note: Realtor Associations, agents, and MLS’ have started implementing changes related to the NAR’s $418 million settlement. While home-sellers will likely save thousands in commission, compliance and litigation risks have significantly increased for sellers throughout the nation. Learn how NAR’s settlement affects home sellers.
89% of homeowners sell their homes via a real estate agent. When working with a real estate agent, both the seller and the agent have to sign a contract. A listing agreement is a contract that binds you to the real estate agent.
An open listing agreement contract permits you to enlist multiple real estate agents at a time. This offers flexibility in marketing and selling your property. However, the agent that sells your property would take away 5%–6% of the sale price as a commission.
With Houzeo, you can list your property on the MLS for a flat fee and save thousands of dollars in listing agent commission. Additionally, you get access to Houzeo’s mobile app to manage showings and offers on the go.
What Is an Open Listing: Definition of Open Listing in Real Estate
An open listing is a non-exclusive contract between the home seller and the agent. The agreement allows you to work with several agents at the same time. Each agent attempts to sell your house independently. You pay a commission to the agent who gets a buyer.
Moreover, an open listing agreement allows you to look for buyers and sell your house yourself. In this case, you do not pay any commission to any agents if you find a buyer.
How Does an Open Listing Agreement Work?
The open listing agreement allows you to sell your house with multiple agents. Here’s how it works:
- Create an Agreement: You can create a contract with multiple agents. It contains all the terms and details of the commissions you need to pay.
- Find a Buyer: You and the agents search for a buyer for your property.
- Manage Showings and Negotiations: You need to coordinate showings for interested buyers. You can also negotiate the terms for sale accordingly.
- Close the Sale: You pay the commission only to the agent who finds the buyer, not all the involved agents.
Pros and Cons of Open Listing Agreement
As a seller, you have to weigh the pros and cons before you enter into any legal contract with the agent.
🟢 Pros
- Increased Exposure: Multiple real estate agents list the property for sale using their networks. This increases your property’s exposure in the market, speeding up the sales process.
- Commissions Savings: While being in a contract with the agent, you still have the right to sell your property independently. So you can skip the commission if you find the buyer yourself.
- Flexible Contract: An open listing agreement is a short-term contract valid for 90 to 180 days. It is also a non-binding agreement, and you can cancel it at any time.
🔴 Cons
- Added Responsibilities: In an open listing, you are solely responsible for marketing your property, negotiation, showings, etc.
- Lack of Motivation: With multiple agents involved, they would be less motivated to sell your property.
- Inconsistent Marketing: Each agent has a different strategy. Diverse agent strategies can lead to uncoordinated efforts. This can cause potential delays in property sales.
Open Listing vs. Exclusive Listing Agreement
Other than open listing, home sellers also have a choice of exclusive listing. In an exclusive listing agreement, you work with a single agent to sell your property. There are 2 types of exclusive listings – exclusive agency listing agreement and exclusive right-to-sell agreement.
Whereas, in an open listing, multiple real estate agents market your property. However, you pay a commission only to the agent who brings you the buyer. Under this listing, you are allowed to market and sell your property yourself.
Alternatives to Open Listing Agreement
Here are a few alternatives for an open listing agreement:
Multiple Listing Service
MLS is a crucial marketing tool for selling your home. Homes listed on the MLS sell faster and for 17% more than the homes not on the MLS. It provides maximum exposure to your property to potential buyers.
MLS listings are syndicated on websites like Houzeo.com, Zillow, Realtor, etc. Houzeo is a top alternative to get your home listed on the MLS. Listing with Houzeo can save you thousands of dollars on listing agents’ commissions.
Additionally, Houzeo’s advanced tech tools like Lead Management, Houzeo Showings, and Houzeo mobile app help you manage your property listing efficiently.
Exclusive Agency Listing
It is an exclusive contract between you and the agent. Under this agreement, your represented agent markets, manages showings, and sells the property. After a successful sale, the agent is entitled to an agreed commission.
Besides this, you are not allowed to work with any other agent until your contract is valid. However, this listing agreement allows you to list your property For Sale By Owner.
Exclusive Right-to-Sell Listing
Under this listing agreement, your agent solely lists, markets, and negotiates on your behalf. You are not allowed to work with other agents during the contractual duration.
The exclusive right-to-sell agreement allows you to list and sell your home yourself. But, the agent gets the agreed commission irrespective of who brings the buyer.
Net Listing
In net listing, you can set a desired sale price for your property. You can share the listing information with multiple agents to begin the sale process. The agents add a commission to your asking price and present it to buyers. Any amount exceeding the price goes to the agent as a commission.
In such a situation, the agents can hide low-price offers from you that undercut their commission. Therefore, net listings are less preferred as they can lead to conflicts of interest between the seller and the agent.
Should You Sign an Open Listing Agreement?
Yes, an open listing increases your chances of selling your home since you have multiple agents as representatives. However, you may find very few interested agents to sign an open listing agreement.
You can choose to sell your home For Sale By Owner and save thousands on hefty agent commissions. You can opt for Houzeo’s Flat Fee MLS plans and get your property live on the MLS within 24 hours.
Eager to Know How Houzeo Works?
We’ve got you covered. Check out the following video to understand how Houzeo works and why it is one of the best For Sale By Owner websites in the U.S.
» Need More Clarity? Read this exclusive Houzeo review and learn why the platform is the best in America’s competitive housing market.
Frequently Asked Questions
What is an open listing agreement in real estate?
An open listing contract is a non-exclusive listing agreement between a property owner and a real estate agent. It grants the agent the right to list and market the property for sale.
Can you put an open listing on MLS?
Generally, open listing properties are not listed on the MLS by the associated agents or brokerages. If you want your property to be listed on the MLS, you can hire a third-party discount broker or a Flat Fee MLS service like Houzeo.
How are commissions handled in open listing agreement?
In open listing agreements, you handle commissions and negotiate with individual agents when they bring potential buyers for your property. You can agree on commission rates with each agent.
Who gets the commission in an open listing agreement?
The agent and the associated brokerage get the agreed commission in an open listing agreement if they bring in the buyer. However, you can save up on the real estate commission fees if you are able to bring a buyer yourself.
