What Is an Open Listing in Real Estate?
An open listing gives the seller more flexibility
An open listing lets owners sell their homes themselves as "for sale by owner" properties. It's a non-exclusive listing agreement, allowing an owner to execute open listings with more than one real estate broker and pay only the broker who brings an able buyer to the table whose offer is accepted by the owner.
What's the Difference?
The biggest difference between an open listing and a listing that gives only one agent the right to market and sell your home is that an owner will probably pay only a selling broker's commission in this situation. The owner is unrepresented. This is about one-half of the typical fees.
Owners don't pay a broker to represent themselves, but they do pay the broker who represents the buyer. And the owner won't owe a commission to anyone if the owner finds the buyer on their own.
Why Would a Seller Use an Open Listing?
Sellers might consider an open listing over an exclusive-right-to-sell listing if there are a lot of buyers in the marketplace. An open listing can be negotiated separately with each real estate broker, and numerous brokers can bring buyers to the table.
An open listing might also seem attractive if the property has some problems and is difficult to sell. Having multiple agents working on potential deals and bringing interested buyers can increase the odds of sale sooner rather than a long time later.
The commissions to various agents can all be different or identical. It depends on whatever can be negotiated.
Sellers aren't exposing themselves to a lot of risk by giving an open listing to several brokerages if there are more buyers in the marketplace than sellers with attractive listings. The main risk in this case might be a lack of exposure to all real estate buyers.
For Sale By Owner
Some sellers believe that they can advertise a home adequately and reach buyers through the internet, so they don't see any reason to hire an agent. They sometimes overlook the fact that agents bring a lot more to the table than simply an ability to find prospective buyers.
An experienced real estate agent can help a seller avoid common mistakes. Sellers don't always recognize that value until they make a mistake and it's too late.
Why Would Agents Agree to an Open Listing?
Agents who work with a lot of buyers might agree to accept the terms of an open listing if they want to guarantee that they'll get paid for bringing a buyer to the seller.
Agents generally don't advertise the property or spend money on promotion with an open listing unless they're fairly assured that the buyers who respond will contact only that agent.
The property might be unique, or appeal to a large number of buyers. An agent might see an open listing as the only solution because the seller won't agree to an exclusive right-to-sell listing.
It's very uncommon to see open listings in the MLS, but this doesn't mean they're not a viable option in some cases.
Open listings might hold value for sellers in rural settings who don't want to commit to one single real estate brokerage. Rural listings tend to cover large areas and word of mouth travels fast. Sellers in the country can list with every broker in the area if the brokers are willing, and pay only the brokerage who ultimately presents the winning offer.
The downside is that the seller typically has no agent to act as fiduciary or with negotiations, home inspections, or disclosures. There are no fancy photos, aerial tours, 3D enhancements, or professional marketing unless the seller is able to handle these things personally.
In fact, the seller is actually paying another agent to negotiate for the buyer.
At the time of this writing, Elizabeth Weintraub, CalBRE #00697006, was a Broker-Associate at Lyon Real Estate in Sacramento, California.