“Open Listing” means owner of the property can let as many agents as possible to market his/her property & will pay a commission only to an agent who can find the buyer/renter to the owner. In this case, any agent with the potential buyer/renter can approach owner directly & close the deal, other agents all lose out & get nothing at all.
Pros: Free to work with any agents Can avoid giving sole listing to a non-performing agent & 12 months time wasted. Free to get it sold/rented on own without paying a commission to an agent. Pro to the open listing agent, they don't have to work that hard on the property.
Myths: More agents marketing mean can sell faster (Fact: agents will not put in their full effort, time & money to market an open listing) Can fetch higher price because it’s competitive among agents (Fact: Competition among agents is true, but offer they secure for seller/landlord could be low, because they hope to close it faster)
Cons: No need to put in a full effort & money into marketing a property. Agents might push their sole listing first, before an open listing. Listing will not get maximum market exposure, as money won’t be spent into marketing open listings. No commitment. No control of the advertised price. Buyers will be misunderstanding that there are so many units available on the market due to duplicate online ads, which will make buyer reluctant to offer a good price. Will take longer time to sell/rent at the price the seller/landlord expected.
“Sole Listing” means owner has given an exclusive right to a sole agent to market his/her property. Other agents with potential buyer/renter have to work with a sole agent in order to close the deal. Sole agent will then share his commission with the co-broke agent who brought the buyer/renter in.
Pros: Sole agent will put in all effort, spend time & money into marketing the property because he/she knows the effort will not go unrewarded. He/she has a commitment to the seller/landlord, and committed to get the property sold/rented within the shortest possible time & at the highest possible market value. Prices are controlled so there is no undercutting of advertised price. No conflict of interest. Sold/rented at fair market value, or at the highest possible price that market can support. Sole listing will be sold/rented faster, due to maximum market exposure created by the sole agent. The agent has full control meaning he/she knows exactly what is going on with property and can advise seller/landlord appropriately.
Myths: Only 1 agent marketing will slow down the whole thing (Fact: Sole agent has an incentive to aggressively market the property, hence result in faster sale). Will not reach most buyers/renters who represented by agents (Fact: Buyers follow good listing, not agents, & sole agent will make sure he/she captures all potential buyers/renters through various marketing channels). At least 12 months time will be wasted if sole right to market has been granted to non-performing agent (Fact: Most reputable Real Estate Agencies will allow pre-mature termination of exclusive contract if their agent is non-performing, seller/landlord just has to write in with proof).
Cons: If property was sold/rented to seller’s/landlord’s own relatives or friends, seller/landlord still needs to pay commission to sole agent. (Actually he/she should be paid too, considering that he/she has put in all his/her effort, time & money into marketing it, but often seller can request some discount from him/her if it happen within the first month of marketing).