As more and more properties sell, homeowners wishing to sell their homes will soon begin to question the value of having a real estate agent. We are already seeing many sellers asking agents about open listing their property, or in some cases offering to pay a commission to the agent that sells their home without formally listing it. There are several perceived benefits for using the “Pocket or Open Listing” strategies:
- The seller will get far more exposure by letting a number of really good agents represent their property if they don’t just list with one agent.
- If a prospective seller knows a number of good agents, they can avoid hurting anyone’s feelings and uncomfortable situations if they don’t sign up with anyone.
- The seller can negotiate a lower commission if the agent represents both the buyer and seller.
Although on the surface, these arguments seem to have merit, in practice the Open or Pocket Listings rarely work. If you have a prospective seller that is thinking about using either one of these strategies, there are several key points that should be made to help the seller identify the risks associated with using an Open Listing or Pocket Listing strategy.
- Risk to the Agent – At first blush, it may not seem to make sense to have the seller look at the strategy from an agent’s perspective. In reality, this point is the strongest and should be made first. Use an example that shows your Seller the risk involved in agreeing to one of these two strategies. “Mr. & Mrs. Seller, if you were to invest a great deal of time and even money providing services to your client, and you were successful in helping your client achieve their objective, would you be comfortable having a competitor get paid, while you made nothing?” That’s exactly what can happen when you work tirelessly to sell a home, and the buyer ends up putting an offer in through another agent.
- Motivation – Human nature must be factored into the equation. No matter how much we want to believe we do our jobs because we are honorable, it is far easier getting up in the morning and going to work and doing a great job, when you have an excellent chance of earning a living by doing so. In other words, all agents are more motivated when they know their compensation is protected.
- Accountability – We’ve all heard the expression “Too many cooks in the kitchen“. It is used to explain what can happen when you have a number of talented people all trying to do the same thing, mass confusion results, and in this case, a failed dinner. The same holds true for Real Estate. If multiple agents are assigned the same task, no one agent is accountable or on the hook for success of the projects. In other words, if you’re selling your home, you must be able to hold one person accountable for managing the project. Consider the success of each team on Trump’s TV show “The Apprentice”. The success of the team is determined by the strength of the Team Manager. On the show, The Manager of the Team that loses is faced with being terminated. If no one person were assigned the task of success on the show, can you imagine the politicking and mass confusion that would result? Once again, the same thing applies in Real Estate. You want to have agents working together, not competing with one another for the same house.
- Representation – Usually, success in selling a home is directly related to the talent of the Listing Agent. It is important for a seller to know that a great deal of preparation goes into to an agent’s representation of a home. That is why so many seller’s request the agent personally show the home to every prospective buyer. When this doesn’t happen, a seller can have the perfect buyer and an poorly prepared agent can blow the deal. By relying on you, the seller alleviates this disastrous situation.