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.
FYI – you can negotiate, even with Corcoran, for less than a 5% commission. They are all competing for the decent listings – remember, you are in the power position here. We got them down to 4% when we sold our place.
BTW: I didn’t mean to imply that the commentary on this site is generally ‘inane’. Only some of it. Brownstoner.com is a great site. Hugely informative and beautifully designed. It’s a great resource.
It’s so frustrating to read some of the inane commentary on this site. “One of the biggest scams is paying more than 5%”? “On an 800K property the broker is getting close to 50K”? When a broker sells a listing he/she splits their commission with their agency. So lets run those numbers again: 6% of $800K is $48,000; multiplied by .5 = $24,000. Now that assumes that the listing agent also brought in the buyer. If another agent brings in the buyer, the two agents split the commission (which they, of course, split with their agencies). So the listing agent could walk away with a whopping $12,000. Take into consideration all the buyers agents cart around which lead to nothing, all the listing pitches agents go on only to have them turn into FSBOs, all the times customers show up late or not at all. On top of all that, real estate brokers survive on commission only. I doubt Dave has the cahones to give it a shot. And, also, PRICES ARE NOT ALWAYS SET BY THE REAL ESTATE BROKER! Believe it or not, sellers don’t always take the advise of their broker; many sellers insist on an over the top listing price despite the protestations of their agent.
Co-broking with two listing agencies is a bad idea. Neither agency will expose the property as much as an exclusive; it just doesn’t make economic sense. There’s always trouble scheduling open houses and showings between two agencies. An innocent buyer could end up going into both agencies and talking about the same property. Who gets credit for the sale? I’ve seen co-brokes devolve into a real mess. It’s much better to make the right to sell clear and firm. Too many cooks, ya know?
Eric, did I read that right? A co-exclusive is a disincentive to work hard? Both sides give up? What planet are you from??
One of the bigest scams is paying more than 5%. You have to realize that on an 800K property that the broker is getting close to 50K for a few weeks of showing the property. If you calculate out the time visiting the property with potential clients and the commission made, the numbers are insane. If you can price your property well and list it and show it yourself, thats the way to go, if not negotiate your commission and never pay more than 5% more like 4% if that.
It was my understanding that the larger brokerages – Corcoran, Brown/Harris, Halstead, etc are all REBNY and now share listings/multiple listing…as of some time last year. How does it then currently work with the large brokers- with shared listings, exclusive, co-exclusive? what if anything has changed?
I am a broker, with one of the big firms out here …the only way that we can market a property is with an exclusive. we dont list anything on our website except our exclusives. the co-exclusive is an ok way of going, but the problem is that winner takes all (meaning whichever agency sells the property, takes home the entire commission, and the co-firm that doesnt sell it, gets nothing). I have seen times where this becomes a dissincentive as the two parties are competing for the sale and neither are really working as hard as they would if they knew they had the opportunity to sell it on their own.
Sounds like a prudent course of action. Good luck! Anyone else done it this way?
We have a brownstone coming on the market in Brooklyn Heights right now and have thought long and hard about marketing it ourselves, exclusive with a broker, co-exclusive, etc. We came to the conclusion that for any type of exclusive the seller ought to receive a tangible benefit such as a lower commission. Ultimately we decided to grant a co-exclusive to Corcoran and Elliman and agreed to a 5% commission. My reasoning is that a “co” arrangement creates competition, doubles your marketing budget, etc. My experience has been that this process is *highly* people dependent, so your success has everything to do with the actual people handling the sale: they have to price it right (not too high but at a level reflecting fair market value or slightly below that to generate interest), stay on top of your property and treat prospective buyers decently. So, hopefully we will accomplish those things with the two individuals representing us. We shall keep the brownstoner community posted.