Mastermind #11, July 27 2011
11 Masterminds and counting. In honour of this occasion, I present the Einstein Bobblehead. Sessions are fun and well attended, a sure sign that agents are finding them worthwhile. Today, we had a fun talk about the who, what, where, when and whys of exclusive listings.
An exclusive listing is a contract with a brokerage that gives them the authority to sell a property. As a seller, you are bound to the same terms that you would be under an MLS contract. However, if you thought that your cousin Harry, twice removed, might buy your house, you can exclude him from the exclusive listing. So the question remains, why do sellers opt to have their properties listed exclusively rather than MLS? On the surface it seems that listing it on the MLS would expose it to more buyers and as agents, our job is to make sure our clients get the most money, in the shortest amount of time with the least hassle.
Many years ago, before MLS was as sophisticated as it is now, buyers would approach us to find them particular homes. Agents would simply start knocking on doors and ask homeowners if they wanted to sell. In those days, it was a case of buyer beware because our duty, as agents, was only to the seller. We would have the seller sign an exclusive listing agreement, then present an offer on the buyer’s behalf. Today, we have buyer clients, solidified through a BRA, and seller clients via listing agreements, be they exclusive or MLS. We also have a Seller Customer Service Agreement which is essentially a commission agreement for properties not listed. What is the difference? Simple. When a seller signs an exclusive listing agreement they agree to a client-broker relationship and accept that there is a chance there could be a multiple representation situation. You owe them the duties of full disclosure, confidentiality, good faith, obedience, accounting, and competence. If the seller is nervous of multiple representation and the potential dangers that exist, they might sign a Seller Customer Service Agreement instead. Under this agreement, you still have a number of duties that you are legally required to provide to them including honesty, fairness, integrity, and due care in answering questions but the agent has a client relationship with the buyer.
There are several reasons sellers opt for exclusive listings; Sometimes they don’t want to deal with lots of people walking through their homes. Perhaps they are older or have health problems and want to keep the disturbance to a minimum and of course there are situations where the seller doesn’t want to publicly advertise the price of their home. Other times it is simply a situation where the house is being prepared to go to market but the agent wants to get a select few of agents interested first and wants to have a contract in place.
If you are an agent who finds an exclusive listing that might fit your client’s needs, call the agent, get the details and ask if they will cooperate with you. Cooperating means that they will pay a commission if you sell the home. While it rarely happens, there are times when an agent lists a home exclusively and will not cooperate with other agents. I would be raising the red flag right away. Chances are that agent is simply trying to sell the home himself and cut other agents out of the deal. I wonder if they are actually doing their seller a disservice. Make sure you have a signed BRA, as some buyers, if interested in the house, will try to circumvent you and deal with the listing agent directly. Believe me, it happens. If they are cooperating, get them to send you a Confirmation of Cooperation first, so there are no surprises.