What other brokers won’t tell you about OPEN Listings

Many business owners think they will put all the Agents in the world to work for them without their having any commitment with anyone and, with the hope, in the back of their minds, that they will sell it themselves and have to pay no one.

Well, it is partially true. They will get lots of Brokers. However, this arrangement benefits the Broker so little that good Agents will stay away from open listings. While losing the good Agents you will also lose the good Buyers working with those good Agents.

No Agent in his right mind will spend time, money or effort marketing an open listing. If they do, they will complicate the life of many Brokers and the Buyers who are working with them. This is another way of keeping the best Buyers away from your business.

The Seller thinks: “I’ll give my home to all the agents and whoever sells it gets paid. Plus, the more agents, the more buyers I am likely to find.”

This is what’s known as an open listing (or a ‘general listing’). The advantage with this method is that you are not committed to one agent. If your business does not sell, or if you sell it yourself, you owe nothing to any agent. With so many horror stories about agents, an open listing appears an ideal solution because you can sack the agent at any time with no further obligation.

There are two disadvantages with an open listing - and they are BIG ones: you are almost certain to have either a low priced sale or no sale.

The reason you often receive a lower price with an open listing is that the agents are being paid to find a buyer before another agent finds a buyer. It’s a race to get your business sold. The focus is to get any price and persuade you to accept it before another agent finds a buyer.

You may say that you will only sell with the agent who brings a buyer at the highest price - which sounds good, but it doesn’t happen that way. Most buyers shop around among many agents. If they see your business in the listings of more than one agent, the question they ask each agent is: “What is the lowest price I can pay for this business?”

The asking price may be the same with each agent but all it takes to ruin your chance of the highest price is for one agent to say, “I can get it for you for less.”

Open listings tend to have a lower priority than exclusive listings, and receive much less exposure. Would you spend a lot of time on an investment if there was no guaranteed return?

-Advantages of an Exclusive Listing
Having an exclusive listing allows you to deal with one professional agent, who is dedicated to marketing, and selling your business. A Non-Exclusive listing results in having to speak to a number of people who are not as committed to selling your business, and may not even be recognized real estate agents. Imagine having pre-qualified buyers, professional showings, high-quality flyers of your business printed in full color, written offers and professionals handling the legal issues, and all of the paperwork commonly associated with selling a business.

For example, if the business was initially priced at $500,000, Agent A may quote $498,000 to Buyer. In order to secure Buyer, Agent B will quote lower $495,000 while Agent C will quote $490,000 for the same business. Finding $490,000 attractive, Buyer approaches Agent C to buy the business. In turn, Agent C tells seller that there is only one interest buyer who is will to offer $490,000. Thinking that $490,000 was the best offer from the only Buyer, owner sold the business. To an agent, it is only about $200 difference in commission (assuming 2% of selling price) when the business is sold at $490,000 compared to $500,000. However, to an owner, the difference amounts to $10,000!

Each time you hear something too good to be true, ask again. There is no free lunch.

Exclusive right to sell listings
An exclusive right to sell listing is also referred to as an exclusive authorization and right to sell or just a plain, old exclusive. The exclusive is the most widely used form of listing contract in the United States. Here are the reasons it's popular with sellers and brokers:

Maximum incentive for brokers: Under this form of exclusive listing, the listing broker gets paid if anyone -- even the owner -- finds a ready, willing, and able buyer for the business during the life of the contract. Owner and broker are allies, not adversaries, with a mutually beneficial goal of getting the listed business sold as quickly as possible for as much money as possible.

Maximum effort for seller: An exclusive right to sell listing gives your listing broker a strong monetary incentive to focus his or her time, energy, and advertising dollars on one priority -- a fast, top-dollar sale of your house. To that end, the listing broker should immediately cooperate with any and all other brokers who might have buyers for your business by offering to split the compensation 50/50 (or whatever split is customary in your area) with the broker who generates a ready, willing, and able buyer.

In short, an exclusive listing works towards the advantage of the business owner.