An open listing is an agreement in real estate where a property owner sells their home independently or with multiple agents.
Real estate professionals must know the different types of listing agreements to ensure they maximize their potential. You’ll need to learn how open listings work from trusted real estate connoisseurs. Luckily, we have years of real estate experience to give you all the details you need.
In this post, we’ll define open listing, explain how these agreements work, and analyze their pros and cons. Keep reading for all the facts you need to know!
What Is an Open Listing?
An open listing is a real estate agreement where property owners sell their home on their own or using multiple real estate agents. In this type of non-exclusive listing agreement, the seller is not beholden to any sole agent; multiple agents can compete to find a buyer and receive a commission.
If multiple agents work together to market and sell the home, they share a portion of the commission. However, if the property owner finds a buyer without outside help, they can avoid paying a commission fee to anyone.
An open listing is also commonly referred to as a “listing agreement on a non-exclusive basis.” If you hear real estate professionals using this jargon, you’ll know they’re referring to an open listing.
However, we should note that an open listing agreement is not particularly popular in real estate; agents often avoid this type of agreement because it does not guarantee them a commission check.
What to Include in an Open Listing Agreement
So, what terms should sellers and agents discuss in an open listing agreement? An open listing contract should cover the following details:
- Name, address, and contact information of the seller
- Property description
- The contract term
- Details about commission fees
- The listing price
Open Listing vs. Exclusive Listing: What’s the Difference?
Before we move on, we should discuss how open listings compare to exclusive listings. In an open listing agreement, multiple real estate agents compete to sell the property. Meanwhile, in an exclusive listing, the seller gives only one agent the exclusive right to sell the property.
There are two types of exclusive listings in real estate that we should know:
- Exclusive right-to-sell-listing
- Exclusive agency listing
Let’s explain how each type of exclusive listing compares to an open listing!
Open Listing vs. Exclusive Right-to-Sell Listing
In an exclusive right-to-sell listing, only one real estate agent has the right to market and sell the property. Even if the property owner finds a buyer, the exclusive agent still earns a commission from the sale.
Exclusive right-to-sell listings are the most popular listing agreement in real estate. Real estate agents often push for this type of listing, as it offers them the most benefits and the least amount of risk.
Open Listing vs. Exclusive Agency Listing
In an exclusive agency listing, the seller hires only one agent to sell the property, but the seller still retains the right to find a buyer. If the seller finds a buyer, they no longer have to pay a commission to the exclusive real estate agent.
This type of listing agreement is not regularly used in real estate, as agents run the risk of marketing a property only to receive no commission.
Pros and Cons of an Open Listing
Some pros of open listings include more freedom for the seller, access to advice from multiple agents, and a faster sale. Some cons of open listings include confusing commission fees, a lack of a strong seller-agent relationship, and a possible loss for agents.
Let’s discuss the pros and cons of open listings in greater detail below!
Pros
One of the benefits of an open listing agreement is that home sellers are not stuck with one single agent. They have the freedom not only to find their own buyer but to employ the help of multiple real estate professionals. This means sellers can get marketing advice and expert opinions from various sources.
Another significant advantage of open listings is that the property may sell faster. The reason for a speedy home sale is that many agents compete to earn a commission. As a result, more potential buyers see the home and make offers.
Cons
One drawback of an open listing agreement for home sellers and agents is that the terms about commission fees can get murky. In traditional listings, a real estate agent knows exactly how much they will earn once the property sells. However, in an open listing where the seller has not signed a cut-and-dry contract with one agent, the rules regarding compensation can be unclear.
Another con of open listings is that sellers miss out on having a dedicated real estate agent in their corner. For example, when you sign an exclusive agency agreement, you get the help of an agent focused on marketing and selling your home. With an open listing, you’re more on your own.
Another drawback of open listings for real estate agents is that they are not guaranteed a commission. They have to compete to make the sale against other agents, so their efforts could all be a waste of time.
Check out our table for a clear visual of the pros and cons of open listings
|
Pros |
Cons |
|
|
Open Listings |
|
|
Example of an Open Listing
Say that Erica wants to sell her home fast. She could sign an exclusive listing agreement with an agent, but the contract requires a six-month term, and she would like to sell her home faster.
Erica chooses an open listing option instead to ensure a speedy process. This way, she has multiple real estate professionals working to sell her property. She also continues searching for a buyer on her own to streamline the process further.
In just a few short months, Erica finds a buyer all by herself. As a result, she doesn’t have to pay any commission fees to real estate agents.
Should I Use an Open Listing to Sell My House?
If you’re trying to sell your home, you may wonder, “Should I use an open listing?” Well, let’s discuss whether or not you’re a good candidate for this type of listing agreement!
Many FSBO sellers choose an open listing over an exclusive listing. If you’re an FSBO seller, it means your property is “for sale by owner.” An open listing can be an excellent option for FSBO sellers if they want to sell their property quickly without paying an agent commission.
But keep in mind- your home may sell for less without a qualified agent to market the property. If you’re debating using an open listing, you may want to consider the benefits of an exclusive agency listing instead.
Are Open Listings on the Multiple Listing Service (MLS?)
In most cases, an open listing will not be featured on a multiple listing service (MLS). The MLS generally requires that sellers have an agent to list their property on the database. However, there are some cases where a seller can pay a fee to get their property featured.
Frequently Asked Questions
Let’s dive into some frequently asked questions real estate students have about open listing agreements.
Do Open Listings Have Expiration Dates?
Like any real estate listing agreement, open listings have an expiration date. However, an expiration date is less relevant for an open listing than an exclusive listing. Why?
In an open listing, the home seller is not committed to paying a commission to any specific real estate agent. This means the contract terms are often more flexible regarding agreement length and rules about commission fees.
According to HomeLight, a real estate listing very rarely expires before the property is sold, especially if there is an agent on board.
Is an Open Listing a Net Listing?
No, open listings are not synonymous with net listings. A net listing is an agreement between a seller and a listing agent where the seller sets a minimum price they want to earn from the sale. If the property sells for more, the listing broker earns any money above the minimum price.
What Is a Closed Listing?
A closed listing is a listing that is no longer active. Buyers can no longer purchase a property if the listing for that property is closed.
A listing often closes because it has yet to receive attention from buyers. The listing agent may remove the listing, compare it with other houses in the market, and lower the asking price.
Another reason a listing may close is that a buyer has already purchased the property and is the new owner.
What to Know Before the Real Estate Exam
An open listing is a real estate agreement where the seller can sell the property independently or get help from multiple agents.
In an open listing arrangement, the seller does not have to rely on one single agent; they can look for potential buyers themselves, along with multiple brokers and agents. If you’re studying to take the real estate exam, you’ll need to know how an open listing agreement works.
Of course, this is just one of the many topics you should master before testing day. Luckily, you can brush up on key terms using our online Real Estate Flashcards!
