Exclusive or Open Agency?

Now and then I am asked to consider listing a property that is already listed with another agency. The place has not sold and the vendor feels that they’d like greater market place coverage. Sometimes this request is from outside my immediate district. “You’ll know someone up your way”, is the refrain.

Other times a vendor has allegiance with a stock agent, so feels they should give them the listing as well as a specialist property agent. There’s a few more scenarios why vendors think giving the listing to multiple agents is a good thing, or the right thing to do.

Learning about the property

So, is it a good idea?

Without beating about the bush, no.

Before I explain my reasons, let me summarise how the two main types of agency agreements work in practice.

An exclusive agency agreement is an agreement with one agent only. This is the agreement most agents prefer, and most vendors should too, with good reason. This agreement gives the agency the ability to confidently conduct the marketing campaign without distraction.

It is important to know that even if another agent, or even the owner introduces the buyer, the exclusive agent has the right to a full commission under an exclusive agreement.

In practice, what typically transpires if another agent introduces a buyer through them, the two agents will “come to an arrangement” that they are willing to reciprocate. They look after each other as far as commission is concerned, and the seller does not have to concern themselves.

So, every potential buyer comes to the property and the vendor through a single gateway, if you like. That gateway is the single, exclusive, agent. By having that single gateway, your agent can better assess the individual buyers coming through.

An open agency agreement is not exclusive. A seller can enter into an agreement with as many agents as they like. The agent who sells the property gets paid whilst any others get zero, regardless of how much effort they have made in promoting the property or how many inspections they have conducted. This strategy risks clear communication channels. Now we have multiple gateways, all with gates swinging in the wind. Co-operation between agents goes out the window. Sometimes there can be a dispute about who introduced a buyer to the property. There can be undermining of agents by other agents as they all fight for the sale. Then there’s the unscrupulous buyer. This bloke might play one agent off against another; get some information from one to contradict or manipulate another. Believe me, it happens.

Open listings can also present poorly to the marketplace. Sometimes the agents have different prices on a listing. Sometimes there are contradictory descriptions of a property; one might say a capacity of 280 cows while the other says 300. Multiple sale signs at the front gate. All very shabby and incoherent, which can send contrary signals; that of desperation and that of disinterest. Either way it’s a bad look.

Simply put, whilst there may be rare instances of an open agency being appropriate, it is not a sustainable or practical way for any agent to conduct business and it is not the best method to sell a property.

A way around choosing between two agents if you have allegiance to both, is to have them work in conjunction. That is, where the two agents split the commission because they are officially working on the campaign together, effectively as one agency. Not all agents are agreeable to this but if you have genuine reasoning, it may be worth considering.

The best way to achieve the best result is for the vendor and the agent to work together toward the common goal. Present your property as being represented by a unified team. Yes, the agent must the leg work, but work with them. Don’t allow the opportunity for skulduggery to undermine anyone’s efforts. If you have confidence in the agent, go with an exclusive agency agreement. A better result is an assured outcome.

To discuss how MacDougall Rural Property can help you buy or sell rural property in New England and beyond, please give me a call. It would be a privilege to give you a hand in achieving your goals.

Best regards,

Graham MacDougall