Decisions, decisions, decisions. When you decide to sell your property, how and who will list it? Will you go for an open listing or an exclusive listing when marketing it? You need to weight the risk vs. reward for both. Here are some pros and cons that will provide some insight regarding these two different approaches. Getting the best price for your investment should be at the top of everyone’s agenda. Making the choice between open or exclusive listing could also have an impact on any future purchases / sales of other property(s), as well. Moving up and into a better or larger home should be your goal when selling to invest in something new.
Let’s take a closer look at the open listing concept to see if this method is a viable way of selling your current property. When using this type of listing, the owner represents themselves – much like a “sale by owner” transaction. This eliminates approximately 50% or more in commission, negotiated beforehand, since you only pay-out to a Selling Broker. A selling broker is responsible for bringing in a buyer with an acceptable offer. An open listing allows several brokers to bring in potential buyers. If the property owner finds a buyer on their own, no commissions are paid to anyone. This, in turn, puts more profit in your pocket. You will be in full control of the entire transaction(s).
There are other factors that need to be brought forward when marketing with an open listing. Your home might not be seen by all potential buyers looking for a property in your specific area. If a potential buyer is brought to you by a broker or you are personally solicited for purchase, there are a few things you need to figure out on your own:
- Are they a qualified buyer?
- This entails having proper paperwork, making sure they have the means of payment, and much more.
- Are they looking to purchase at the lowest possible price?
- This could mean that haggling and negotiating could bring down your profit.
- You are solely responsible for all negotiations, including specific terms or inclusions/exclusions within the agreement.
- Many freelance or unrepresented buyers are out trying to find an unexperienced seller who can be easily manipulated.
- You never truly know who you are talking to or what their intentions might be.
The above are very concerning points you need to watch out for. Remember, having a professional agent screening through for qualified buyers is a great way to ensure that whoever talks to you has the best intentions. In today’s business world, “sellers beware” is more real than ever. You can waste a lot of time negotiating with a potential buyer who doesn’t have the money or finances to purchase your property. Moreover, an agent will make sure that communication between seller and buyer is always active. They will also oversee all your proper documentations to make sure your house is ready to be sold – including taxes.
Considerations for an Open Listing
When you personally find a buyer who seems reputable enough to work with or gives you an acceptable offer, the responsibilities you must contend with only just being. They are, but not limited to:
- Qualifying the buyer’s financing. Don’t go the full extent of the selling process if the buyer can’t come up with the money.
- Making sure the offer and paperwork are legal and in compliance with local, state and government laws. This includes arranging inspections and any legal disclosure statements.
- Arranging an escrow account for the earnest money to be held in.
- Hiring a legal counsel that will work in your behalf to make sure everything is in order.
- Making sure you properly answer any questions the buyer has during the purchasing period. This includes any legal descriptions, taxes, capital gains and other necessary information needed for accounting purposes.
- Making sure the closing goes smoothly and without any last-minute problems that might have slipped through the cracks during the whole process.
You will create a paperwork nightmare if the abovementioned isn’t managed properly. This can delay the closing, which could cause a qualified buyer to drop out from the transaction. If you are an experienced property buyer and seller, and you can navigate through the laws, then marking your property using the open listing method could save you money. But again, if you’re unexperienced, it might cost you more.
The exclusive listing option goes hand in hand with a real estate agency and a professional agent to market your property. Unlike an open listing, an exclusive listing funnels through a system that opens your home to a network of agents and real estate companies through the MLS system (multi-listing system). This type of listing opens your property up to a multitude of markets in and around the area. When you list with a professional agent, they begin to implement and put forth their professional training to get you the best qualified buyers. They do all the negotiating on your behalf, without ever leaving you on the sidelines and always consulting you on important decisions. Employing an exclusive listing allows you to go on with your typical day while having an agent assume the responsibility to sell your property. They will immediately start to perform the following tasks:
- The agent will create and post a listing with photos, description and contact information that will appear on the MLS, as well as their websites.
- They will pre-qualify potential buyers.
- Agents will arrange showings, provide information and any other needed details regarding your property.
- They handle and consult with you on any qualified purchase offers.
- Professional agents assist in all acceptance contracts and closing procedures, as well as offering suggestion for Notaries and legal counsel.
All of these points are just a few of the many advantages of working with an agent and listing exclusively. This also allows you to have free time to move on with your daily activities without being interrupted with numerous inquiries.
The biggest disadvantage of using the exclusive listing concept is that you must pay a commission to the selling agent. This, in turn, decreases the profitability of your ROI. If you are a person that likes to be on top of everything and needs to know minute by minute what is going on with potential buyers, then listing exclusively might not be your best option. When you list exclusively, the agent fills you in on the process periodically and only reaches out when important issues arise. Another possible reason to avoid an exclusive listing is if your property is located in a very remote area. This would mean agents push your listing further down their priority list due to location. That is an unlikely happening, but still a possibility.
Considerations with an Exclusive Listing
When you list exclusively, you are certain to have the best marketing available. Your agent will arrange for a professional photographer to take photos. They will also post your listing throughout the internet. Fear not, just because you have an exclusive listing does not mean other agents or brokers cannot show or sell your property. In fact, your representative will share the listing with a wide network, allowing for many brokers and external agents to do showings. The broker and the agent will split the commission in this case.
So, open or exclusive listing?
It will depend on you. If the property you want to sell is located in Mexico’s Riviera Maya, you are better off with a professional agent to do all the work for you. They will easily navigate through Mexico’s real estate laws, speak fluent Spanish and understand the market. If you feel confident to do all of that yourself, then an open listing is your best option. However, an exclusive listing is always a great option if you want to stay on the sidelines and let someone else do all the work. Especially in a foreign country. Regardless of which option you choose, we have the ability to help you post and sell your property on our website. If you want to list exclusively, contact us and learn about all the advantages of doing so.
And remember, at Top Mexico Real Estate…we make it happen!