The “Exclusive” Listing: Viable Marketing Tool or Simply a Closing Technique?
We are noticing that the use of “exclusive” listings is being employed by a number of sales people in our area at the present time. As many consumers may not be aware of the difference between the typical full service MLS® listing and an exclusive listing, we thought a few points are worth mentioning.
An exclusive listing is one where the listing sales person or broker lists the property for the seller but the sales person retains the exclusive right to market and sell the property. Exclusive listings are not posted on the MLS® system and therefore other Realtors and their buyers are not given the opportunity to see or buy those listings. Also, the MLS® system does not retain the listing or sales data for any sales done by exclusive listing and therefore, the completeness of the MLS® comparable database suffers.
Why would a seller want to do an exclusive listing?
Exclusive listings are not a new phenomenon and do have a valid application, although typically 95%+ of listings are published with full service MLS® listings to get the widest possible exposure and best marketing impact. A seller may find an exclusive listing appropriate in the following circumstances:
-if they have a very high end, stigmatized or unique property or neighbourhood and the marketing period is expected to be lengthy ie. the property will be hard to sell, given that there is a small community of potential buyers.
-if they have a wish to keep the marketing process tightly controlled and confidential ie no sign on lawn
-if there is such a niche market for the property and a single Real estate professional or brokerage has the unique skillsets, experience or contacts to find a buyer.
-often a lower commission rate is offered on an exclusive listing and this can make sense to buyers but the reality is that a property that is harder to sell and will take longer, should probably require a premium to be paid to the listing salesperson/brokerage.
Why would a seller prefer a full MLS® system listing over an exclusive listing?
-most urban and suburban properties benefit from the widest possible exposure provided by MLS® and that is why the use of exclusive listings is quite limited.
-it makes sense that a listing marketed to and through the whole 3,000+ members of the Ottawa Board and their buyers have a better chance to sell a property than does a single real estate sales person or their small team.
-if sellers need a relatively quick sale, for example within 60 or 90 days; then an exclusive listing is probably not the best vehicle.
-where there are a lot of competing properties for sale, it only makes sense to be included on MLS® where most of the buyers are looking.
Why are we seeing more exclusive listings given the foregoing?
We believe the promotion of exclusive listings is being used as a marketing, closing and objection handling sales technique by some real estate sales people. If a sales person is offering a lower commission rate for an exclusive listing, they may be using this offer to deflect attention or overcome an objection to their full service rate which may have been raised by the seller. As a discount brokerage, we know other sales people and brokers tell clients all the time that our low rates are only because a) we don’t advertise or b) that it is probably because we do an exclusive listing which is not on MLS®.(neither of the foregoing is correct!) “So I can offer you an exclusive listing at a lower rate, if that is what you really want, Mr/Ms Customer? The suggestion is then made that an exclusive listing be posted for 2-4 weeks and if it does not sell, then a full-fledged MLS® listing will be posted. Naturally, the sales person’s higher cost, full service commission rate would then apply.
Why would a listing sales person/broker want to do an exclusive listing?
-helps compete against value priced full service brokerages such as Oasis Realty or others offering new business models
-provides listing inventory on listing brokerage website, lawn signage and print advertising which brings traffic and other potential customers, even if they do not buy the listed property which of course, does nothing for the seller.
-gives that sales person/broker or brokerage the opportunity to earn additional revenue by representing both buyer and seller without competition from other real estate sales people.
-would be sold to a prospective seller as something they do which differentiates their services from the rest of the real estate community
-by convincing the seller to “try them out” with a short term exclusive listing, the salesperson is doing a “soft close” or “puppy dog” close on the seller. We have experienced firsthand a Realtor who promised she had 4 or 5 customers that could potentially buy a property and asked for a one week exclusive listing to allow time for those customers to visit the property. At the end of one week, not one of her customers had visited the property, so it was pretty clear she did not have any interested buyers at all but simply said she had, in order to get the listing. The bottom line is: there is a place for exclusive listings but it is very rarely used by most real estate practitioners, so beware if a real estate sales person or brokerage is flogging an exclusive listing as something “special” since it may mean it is in their best interests and not necessarily those of the seller.