An open listing agreement is a non-exclusive, agency engagement that awards the procuring broker/agent. Open listings are more commonly used in commercial transactions, but sometimes they do find their way into residential deals (note: an open listing is not allowed within the MLS). Generally, open listings are pushed by experienced sellers with the idea that no single broker/agent should control a listing. Open listings tend to be disfavored by brokers/agents because they are not exclusive (i.e. multiple brokers/agents have the opportunity to participate in the sale or the seller can find the buyer themselves and not pay any broker/agent). With that in mind, it is very important that a broker/agent is aware as to how to work with an open listing.
If a broker/agent finds a prospect, it is important that prior to disclosing the name of the prospect, the broker/agent should ask the seller to disclose, in writing, all potential buyers that have been disclosed to the seller. By having the seller disclose all potential buyers, the broker/agent avoids a situation in which he or she discloses the buyer, but finds out that the same buyer is already known to the seller. This important strategy should be discussed with the seller upfront, so the seller appreciates the concern.
Because of the nature of open listings, brokers/agents should take their time to review and negotiate certain terms. For example, the seller should not be allowed to advertise the property for less than the amount the broker/agent is advertising the property for; and, for that matter, if the seller advertises the property, it should be for an amount that includes the broker/agent’s maximum commission amount, so there is not an advantage to a buyer to work directly with the seller. Further, the buyer should not be allowed to place signage on the property or place advertising in the same sources that the broker/agent uses to advertise. The broker/agent should agree to favorable terms in the open listing agreement or some other engagement agreement. Even though the use of an open listing may be required, a broker/agent should not be discouraged for working the listing, provided that basic safeguards are negotiated.
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