What Is An Exclusive Listing?
An exclusive listing means you are granting your real estate agent with exclusive rights and access to find a buyer for your home. With this type of agreement, you will be limited to the number of other agents who will bring potential buyers to your home because only the listing agent is entitled to the commission. In this agreement arrangement, your home will not be put on a local multiple listing service® system (or MLS® system for short) as these listing systems require a cooperating commission to be offered.
Exclusive listings go by other names. If you’re talking with other real estate agents and they refer to pocket listings or hip pocket listings, they’re more than likely talking about a listing which is exclusive.
Of course, your real estate agent needs to work in your best interest and may broker a deal where a cooperating commission may be negotiated with another real estate agent in order to get a deal done – but it isn’t necessary. After an agreed period of time, you can arrange with your agent to have the listing appear on the MLS®. You don’t have to stick with an exclusive listing agreement indefinitely.
An exclusive listing is usually used as part of a marketing strategy where you and your REALTOR® will use the time the property is an exclusive listing to get it prepared for it to be later listed on the multiple listing service®. This may include a property pre-inspection, staging and real estate photography.
You’ll know this strategy is being used when you see a sign saying “coming soon to REALTOR.ca”. Keep in mind that every real estate board and real estate association has different rules regarding this tactic. Your real estate agent will know if this marketing tactic is feasible for your market.
What Is An MLS® Listing?
An MLS® listing or a non-exclusive listing means your property will be listed on the MLS® system and other real estate agents will have the opportunity to bring prospective buyers to your home.
Your listing will be syndicated and distributed to various websites which allows potential buyers and agents to consider your home. Non-exclusive listings are the most common type of agreements in the Canadian real estate market.
Difference Between An Exclusive Listing & MLS® Listing
There are both benefits and disadvantages to listing your home exclusively and non-exclusively. It depends on your end goals and how you would like to navigate the selling process which will determine which method you use.
1. Exposure To Other Real Estate Agents
Exclusive
With an exclusive listing agreement, your property will be limited to the number of agents who will see that your home is for sale.
Since your property is not going on the MLS®, your property will likely only be viewed by agents working at the brokerage with which you signed the agreement. Remember, your listing agreement is between you and the brokerage, not you and the real estate agent.
Depending on the marketing efforts of the brokerage or real estate agent you decide to work with, it may be seen by other REALTORS® who work with another brokerage office.
You should also keep in mind that using this selling practice will often lead to the brokerage representing both you, the seller, and the buyer. Since the brokerage is tasked with finding the buyer, this will lead to multiple representation where the brokerage represents both parties. Some sellers may be hesitant about this scenario and it’s important to talk with your agent about your concerns.
Non-Exclusive
A non-exclusive listing will get your property seen by more buyer agents and as many prospective buyers as possible. Since the property is being listed on the MLS®, your property will be available to other brokerages and their respective sales representatives and brokers.
It may also mean your property and house address will get disseminated to other listing portals through an IDX feed such as REALTOR.ca or another brokerage’s website.
Most buyer agents and potential buyers start their search using the MLS® system or listing websites such as REALTOR.ca – especially if they’re relocating to another city.
2. Control Over Selling Process
Exclusive
With an exclusive listing agreement, you as the seller have more control over the process.
Since the property is not listed on the MLS®, you’ll be able to have more control such as the listing period and who can view the property.
Non-Exclusive
With a non-exclusive listing agreement, you have less control over the selling process. However, this shouldn’t deter you from considering listing on the MLS®.
The reason you have less control over the selling process is due to the fact that your real estate agent is bound to standard operating procedures and practices of the real estate boards and associations they are members of.
There are advertising practices and standards your REALTOR® needs to meet such as offering a cooperating commission, fair competition practices, minimum listing periods and more. It would be best to first talk with your representative about how you would like to see the sale process unfold and whether or not this would conflict with any of the obligations they need to maintain.
3. Timeliness Of Sale
Exclusive
If you’re looking to sell your home fast, an exclusive listing might not be the option for you.
Since you’re limited to the number of potential buyers, you’re going to have fewer people viewing your property. This will ultimately lead to a slower pace at which your house will sell.
Non-Exclusive
With a non-exclusive listing agreement, since your home will be exposed to more buyers, you’ll be able to get more people to view your house. This will lead to more people putting an offer in on your house which will typically lead to a faster sale of your property.
4. Privacy
Exclusive
With an exclusive listing agreement, you’ll be afforded more privacy.
Depending on your life situation or the uniqueness of your property, you may not want everyone in the neighbourhood to know you’re selling. For example, if you have a loft in a very exclusive and boutique building, many people will want to see it since there are likely not many opportunities to explore what the building has to offer.
Alternatively, if you’ve fallen on hard times or are going through a divorce, some things are better kept to yourself.
An exclusive listing limits the exposure of your property.
Additionally, since your property is not listed on the MLS®, the sold data will be harder to obtain by the general public, including pictures. Certain real estate boards and their MLS® rules prevent your agent from conducting unfair practices. For example, if you list your property on the Toronto Regional Real Estate Board MLS® and it gets sold, your agent can’t go back to delete the photos or remove the address.
Non-Exclusive
A non-exclusive listing increases how much your property will be exposed to the general public, especially online. Photos and sales info will be stored and retrievable by other real estate agents even years after the property has sold.
This is due to the cooperative nature of these platforms. The sales data is used to prepare comparative market analyses to help gauge the market value of nearby homes. Without this transparency, it would be very difficult to get an accurate understanding of how the real estate market is performing.
5. Cost
Exclusive
As a preface, all commission is negotiable. There is no standard commission and you should not be led to believe there is.
With an exclusive listing, you only need to worry about how much you’ll pay to the listing agent.
Non-Exclusive
In a non-exclusive listing agreement, your total commission will be split between the listing agent and the cooperating buyer agent.
Be sure to fully understand what the commission split is before you sign any agreement. Oftentimes, when agents advertise low commission fees, they’re only disclosing the commission they’ll receive and not how much the cooperating agent will receive.
6. Selling Price
Exclusive
Due to the limited number of potential buyers that will see your property, you may struggle in getting top dollar for your property.
Although you can set an offer date with an exclusive listing agreement, the number of buyers who will submit an offer will be reduced. This will prevent you from having a bidding war.
You may find yourself only working with one offer at a time.
Non-Exclusive
In a non-exclusive listing agreement, since there are more buyers, having an offer presentation date makes more sense.
Due to the increased number of buyers and increase in competition, you’ll find more buyers are willing to pay a higher price in order to secure your home for themselves. This is supply and demand at work.
Summary: Are Exclusive Listings Right For You?
At the end of the day, the listing option you choose depends on how you want to navigate the selling process. By working with an experienced real estate agent with a proven selling strategy, you’ll be guided on which one makes sense for you.
More often than not, if any of the points mentioned above had you leaning more towards listing on the MLS®, that will likely be the best option for you.
At Shoreline Realty Corp., Brokerage, we never pressure our clients to sign one listing agreement over the other. At the end of the day, what is most important is what the seller wants.
Let’s start the discussion of selling your home with an evaluation of your property. We offer free home evaluations to make sure you’re equipped with the right information to come to an informed decision on whether selling your home is the right decision.
We present the facts to our clients outlining the benefits and disadvantages of both listing options. If you’re considering selling your home, arrange a call with an experienced real estate broker such as Marco Pedri who can help guide you in making the best decision possible.
