The Pros and Cons of an Exclusive
In the Comments section of yesterday’s post on the alleged cracks in the real estate market, the discussion drifted towards the topic of exclusives and whether they make sense from a seller’s perspective. We know the argument that you’ll hear from brokers: That the seller will get better attention and more consistent service from a…
In the Comments section of yesterday’s post on the alleged cracks in the real estate market, the discussion drifted towards the topic of exclusives and whether they make sense from a seller’s perspective. We know the argument that you’ll hear from brokers: That the seller will get better attention and more consistent service from a broker who knows he/she will ultimately get paid. The danger is that a broker promises the moon in terms of price to get the listing and then the property takes forever to sell. When we sold our first apartment in 1997, we did it ourselves but let brokers bring clients. When we were selling our second apartment in 1999, we gave an exclusive to a broker at Douglas Elliman and had a fairly positive experience. What do people think about this? It would be interesting to hear from both brokers and owners on this, so please identify which you are.
i am a seller. how long do sellers typically sign on to an exclusive with an agency? a small agency is currently offering us a 4% commission for 6 months. is this customary? it seems long to me. also, does one need to put it in the contract that the broker split with another agency who brings the buyer will be 50-50? is it also customary to have it put in the contract the ad plan and the frquency of open houses? or would this seem to the agent as if we are trying to micromanage them?
1. Commission is always negotiable. It is never set in stone, in the end the Agents fiduciary responsibility is to the seller.
2.It is our duty to get you the best offer in the quickest amount of time, by that I mean a Ready, willing and able buyer. They must be mortgagable and meet any time restraints set by the seller, etc.
3.MLS/REBNY, this is a consumer joke nowadays. Properties that make it on here are overpriced and unsellable..or the commission split is so low, you might as well sign an exclusive. A large broker with better exposure, a larger marketing budget, etc can do a better job on their own selling your home than through REBNY or the MLS. Smaller brokers use these things as listing tools, they will sign the seller at 3,4,5, 6 % etc….what is SUPPOSED to happen is that the brokers are to split the sale 50/50..seller/buyer. This is not the case, the seller is lead to believe that everyone will compete to sell the listing – lie. The truth is the only way an MLS or REBNY listing will really work is if it is a fair commission 50/50 split or the property is priced correctly and is truly salable (remember the listing broker has to co-operate with competing brokers to sell their listing)….at that point two brokers are splitting the pie….so a 50K commission turns into 12,500 for the listing agent and 12,500 for the selling agent, not bad. I’d work it (don’t forget we pay a nice high tax rate on this money come tax-time). Sadly what happens is a broker signs an MLS or REBNY at 4-5 % maybe even 3….what they split is 80/20, 60/40, 70/30 hardly EVER 50/50…so instead of you siging on for 50 brokers to sell your home, you basically signed an exclusive with one agency. B/C no agent will show that same property above, to make only 6,250 dollars….just beware when signing MLS or REBNY that the broker will truly do a 50/50 split…also be aware that if you don’t sign for a fair commission, even if they do a 50/50 split, you lose the “hoped for” broker competition. Why should they sell your home when they could sell someone else’s and make double the money and probably have an easier time with the sellers…
So what’s your best bet? List with a broker that has a true, written, marketing plan, realize that marketing the property is not even half the battle, dealing with attorney’s, banks, inspectors, engineers, “lookers” not buyers, tenants, supers, boards, etc….that is the true job of a RE agent. An experienced agent that knows how to screen buyers, truly broker a deal and handle banks and attorneys will get your property sold. Those players are the ones that lower the selling price of a home. If the bank does not appraise – no deal. If the buyers don’t get a mortgage – no deal, if the inspector decides that for a 500 fee he has to find something wrong – no deal. Funny thing aboiut inspectors, some of them love to tear homes apart so they can get construction work OR so you call them back again and again for that 500 fee. Anyway, closing the deal, that is where a broker earns their commission. We have the ability to be impartial with buyers, buyers tell us things that sellers would throw people out of their homes if they heard…your lawyer will not speak to your buyer, they can only talk to the buyer’s attorney…lawyers are known to charge mor eif a broker is not involved as well…we handle disclosures, property disclosure, lead disclosure, security as far as strangers coming into your home…etc…their are many benefits to having a real, full service broker. Believe me 80% thats 80% of for slae by owners LIST with an agent after failing to sell on their own…..
That last (2) comment(s) looks like it was copied and pasted from ‘talking points’ list from realtors handbook.
Signing an exclusive right to sell agreement is the best way to sell your property. This method allows your property to receive the exposure it needs to guarantee the highest and best selling price. Agents/brokers are trained professionals that are highly skilled at exposing your property to the greatest amount of buyers in the shortest amount of time. This method ensures a quick sale at the highest price.Signing an exclusive allows the seller to sit back and relax while the agent handles the transaction.
Signing an exclusive right to sell agreement is the way to sell your property. This will allow your property to receive the exposure that it needs to sell at the highest and best price possible. When brokers/agents sign these exclusive right to sell agreements that broker takes on a huge responsibiliy. He/she is promising a higher selling price, which warrants a 6 percent commission. He/she is hosting professional open houses, advertising with local newspapers, magazines etc. Not just posting the add on craigslist, and posting flyers in your local coffee shop. This method will not bring you the highest and best. That agent is working with the attorneys, the appraisers etc, to ensure a swift and worry free closing. Signing an exclusive is basically allowing your agent to control the transaction, while you the seller can sit back and relax.
I think the reduced commission percent is justifiable for these 1M+ properties… is it really 3 times more work to sell a million dollar brownstone than a $300k co-op?
Some of the smaller brokers will sell a brownstone for 2.5-3%, but I don’t think they reach as many people.
Funny – my agent (at 4%) worked pretty damn hard (even sending out postcards with a picture of my property to target buyers) and we sold it for a great price after she solicited a number of bids. It is also wise to make sure the contract specifies how many adds they run and where, how often they have to hold open houses, etc… Sorry – but 4% on a $1.3 million dollar property for one to two month’s work (even if they must split it with their agency – 2% is $26,000) is still more than most people even dream of making and is enough incentive for many.
The bottom line is “Money Talks” If you want an agent to work hard for you, you have to pay them more money(6%). If you want an agent to pretend to work hard for you, pay him less money(4%) and they will be working harder to sell everybody else’s 6% listings. I can’t believe that anybody would work harder for less money.
Yes, Anon, competition between brokers and agencies is most to your advantage before you sign and exclusive right to sell. In a co-broke situation you have agents competing after the property is on the market. Usually doesn’t work well…