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Definitions & Advantages

Definitions & Advantages

Define a Listing

A listing is a contract of agency between a real estate company and a party wishing to sell a property. The company, represented by their sales consultant, agrees to market the property with the aim of finding a buyer whose offer the owners will accept. For this service, the company is paid a commission/fee which is a percentage of the selling price. The sales consultant earns a percentage of that commission.

In real estate, true income comes from listings.

There are two major types of Listing Agencies:

1. Exclusive Agency

2. Open or General Agency.

Define an Exclusive Agency

When a property is listed exclusively with a company such as Harcourts, the seller puts their trust in one organisation and that agency takes on sole responsibility for the sale of that property.

The most commonly used marketing methods for exclusive listings are:

• Auction
• Tender
• Price by Negotiation
• Fixed Price.

What are the benefits of an Exclusive Listing?

An exclusive agency is the most effective type of listing for both the seller and the sales consultant.

 The seller benefits by listing exclusively through:

• Extra care and responsibility with appraisal and pricing information.
• A personal marketing plan which includes promotional services designed to make sure their property gets noticed by the right people.
• More security (especially with the lock box system).
• Excellent feedback, weekly and daily if necessary.
• Total commitment and VIP treatment by the sales consultant responsible.
• Constant marketing reviews.
• Well qualified buyers inspecting the property.
• Excellent marketing exposure i.e. internet, window displays, Bluebook, newspaper ads, direct mail programmes, open days, flyers, signs.
• Computer-matching of sellers and buyers.
• Flexibility – just the one consultant to adjust to any change in plans.
• Quality offers in writing through professional negotiations.
• One consultant aware of and co-ordinating all interested buyers, encouraging competition between buyers and multiple offers on the property.

- Benefits of an Exclusive Listing for a Buyer:

They can have confidence in the consultant’s knowledge of a property, of all activity of other parties interested in buying that property and because of the consultant’s direct link with the sellers.

- Benefits of an Exclusive Listing for a Sales Consultant:

• Increased list and sale strike rate. You have the ability to control and customize the marketing, thereby making the listing more saleable than it would be under a general listing.
• Greater liaison and better relationship with the seller.
• Direct financial gain from commissions, referrals, and repeat business.

Define a Multiple Listing

This is not applicable to all areas.

Here the property is exclusively listed with one agency; but any outside agency that belongs to the Multiple Listing Service can sell the property.

The managers of each agency negotiate the shared commission.

Define a Joint Agency

When a property is listed as a joint exclusive with two agencies, the seller puts their trust in both organisations and together they take on the responsibility for the sale of the home.

• A seller may have a friend or relative in the industry they feel they should list with plus their preferred agency or consultant.
• A builder / developer may wish to maintain a business relationship with two strong agencies in the area.

The most commonly used marketing methods are:

• Fixed Price.
• Price by Negotiation.

Advantages and Disadvantages of a Joint Agency

The benefits to the seller are similar to those of an exclusive agency but these advantages are somewhat watered down by appointing two agencies.

Instead of getting twice the effort, sellers in fact risk receiving half-hearted commitment from both agencies, consultants would prefer the seller to choose one agency or the other for the following reasons:

• Often there is a pricing conflict between the agencies.
• Feedback is not co-originated.
• There is not a 100% commitment.
• There are fewer funds (if any) for marketing and inconsistencies in advertising may result.
• It is harder to build a relationship between the consultant and seller, and another consultant.

Varying commission split arrangements between joint agencies can see the sales consultants working toward securing a sale rather than the best price/result for the seller.

Define Open/General Agency

In this uncontrolled type of listing, the seller gives an open or general authority to sell the property to one or as many agencies as they choose. There is no real commitment either way between the seller and any agency.

The most commonly used marketing methods are:

• Fixed Price.
• Price by Negotiation.

Disadvantages and Advantages of an Open/General Agency

Most real estate agencies will devote a great amount of time, effort and resources to the property owners that have listed exclusively with them. They know they will be rewarded when the property sells. That same commitment does not apply to Open / General listings.

Sellers often feel that by choosing more than one agency the property will gain more exposure to more buyers and therefore they will achieve a sale more quickly. This theory often works in reverse, however, and after the first few days of activity there often follows a period where nobody services the listing properly, as no-one has the responsibility to do so.

In addition, since no-one is coordinating any interested buyers, the seller may accept an offer, not knowing that a higher offer is on its way.
Other disadvantages to the seller include:

• Often incorrect or ill advised pricing.
• Lack of security.
• Lack of feedback.
• Lack of consultant commitment.
• Lack of marketing and funding.
• Minimal or no advertising, depending on office policies and regional trends.
• Less of a relationship between consultant and seller.
• Sales consultants more likely to represent their buyers, rather than the seller.

To the sales consultant, the open/general listing offers an opportunity to convert the listing to an exclusive agency, especially if the property fails to sell. This in turn can lead to further referrals and testimonials.