What is an Open Listing
An open listing is a property listing that uses multiple real estate agents in order to find possible buyers for a property. The agent who brings in the winning buyer for the property collects the commission.
An open listing can also refer to an owner who sells his or her home or property on independently, without paying a commission to a real estate agent.
BREAKING DOWN Open Listing
A property that is sold through an open listing either might need to be sold quickly. The property may have been on the market for a while and faced prior difficulty attracting buyers. An open listing is commonly referred to as a listing agreement with one or more real estate brokers on a nonexclusive basis. Agents who participate in selling this property are all entitled to a commission if they ultimately bring in the buyer.
Why Open Listings Might Be Avoided by Agents
Real estate agents may be reluctant to take on an open listing because of the lack of commitment by the seller to work with one agent exclusively. The arrangement stands to benefit the seller by offering them versatility and more options in finding potential buyers. The seller will also likely only pay half of the usual commission, which would go to the agent who brings in the buyer with a winning offer. This is because that agent usually only serves on the buyer’s side of the deal. There is no selling agent because the seller takes responsibility for all the marketing of the property themselves. The seller might believe the property will be in such demand that it will be relatively easy to attract buyers who can meet her price.
Real estate firms may have rules that govern whether or not their agents may participate in open listing arrangements. For example, some firms might not advertise open listings, but the agents may be allowed to engage clients they already have as potential buyers. Real estate firms can be reluctant to work with open listings out of concern that the seller might find their own buyers anyway and strike a deal without any involvement from agents. That would make the agents’ efforts a waste of time and money. The seller might try to sidestep the agents and work out a deal directly with their clients that cuts them out of the loop. There may also be concerns that the property will not be attractive to any buyers.
The limited potential for agents to earn a commission through open listings may lead them to focus their energy on exclusive contracts instead.