In Commercial Real Estate, there are three types of real estate listings used to secure a buyer for a property.
An Exclusive Right to Sell, an Exclusive Agency Listing, and an Open Listing.
In an Exclusive Right to Sell, a single broker or agent is hired to handle the real estate transaction from start to finish.
In an Exclusive Agency Listing, a single broker or agent is hired to handle the transaction; but the agent would not be covered for a commission if the owner negotiates the sale on their own behalf.
An Open Listing is when an agent is authorized by the owner on a non-exclusive basis and more than one agent can be hired.
Each of these listing types require a brokerage firm to become fiduciary for a seller: meaning there are legal obligations to include loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care.
The most important attributes that a seller would need from an agent which would be his or her time, professionalism, and expertise in that given market as they follow through with these steps in a listing:
First: Establishing a property value and price point to ask market by using lease and sale comps and designing a custom strategy based on the seller’s needs.
Next: the agent creates marketing materials and the offering memorandum with information on future returns, property condition, deferred maintenance, etc.
Then the agent markets the property: posting materials to online resources, working within the network, posting signage, etc. Followed by the agent working with incoming prospects to coordinate and be present for tours and follow-ups.
Once an offer is received, the agent is responsible for contract negotiation. They do not alter or offer legal assistance, but only negotiate the market terms and sellers needs.
And lastly, after contract terms are reached, the agents final job is to oversee due diligence process in order to complete the transaction on time.
Let’s say an owner interviews multiple agencies to secure the listing their property. They decide they like a few of the agents and believe it will drive more interest and competition to hire multiple agents. Let’s also say for the sake of this scenario that all of the brokers hired for the Open Listing are good and professional.
The pro of this situation is: yes, news will travel faster having a few brokers rather than one on one listing.
The cons are:
First: because the seller is hiring more brokers and there’s limited protections to each, the more experienced agents will manage their time accordingly, meaning the seller will receive less of their time and most likely limited effort.
Second: the process can get inconsistent between the brokers causing confusion from potential buyers as they will be contacted by multiple agents, placing them in a precarious situation as well.
And lastly: what typically ends up happening is the seller spends more of their own time and does more of the heavy lifting due to being the middle-man between multiple brokers.
Knowing the Difference.
The unfortunate reality is that while a Seller may have originally sought to save money or create competition for their property sale, they end up receiving less time and effort from the most experienced agents. The less experienced agents rush to get the transaction complete, and the owner suffers without having received the accurate fiduciary responsibilities that they should.
All this being said, every seller is different and have very different needs. Knowing the differences between listing types and how it will affect the sales process based on your needs is an important question to ask in the beginning
Cecil & Campbell Advisors is a commercial real estate advisory firm headquartered in Atlanta, Georgia – specializing in investments, acquisition & disposition, and tenant representation of commercial space.