What Is an Open Listing in Real Estate?
Understand the flexible real estate listing that allows sellers broader control and multiple agent engagement for property sales.
Real estate transactions involve various agreements between property owners and professionals to facilitate the sale of a home. One such arrangement, distinct from more common exclusive contracts, is known as an open listing. This type of listing provides a framework for marketing a property, differing in its non-exclusive nature and commission structure. This article explains the concept of an open listing and how it operates within the real estate market.
Defining an Open Listing
An open listing is a non-exclusive agreement allowing a property owner to sell their home independently or through multiple real estate agents simultaneously. In this arrangement, no single agent holds the exclusive right to market or sell the property. The defining characteristic of an open listing is that commission is only paid to the agent who successfully procures the buyer. If the seller finds a buyer on their own, they are typically not obligated to pay a commission. This contrasts with exclusive agreements where an agent might earn a commission regardless of who finds the buyer.
Key Characteristics of Open Listings
A property under an open listing has no single agent with exclusive rights to sell it. This means the property owner is not bound to a specific real estate professional for the sale. The seller retains the right to sell the property independently without incurring any commission fees if they find the buyer themselves. Multiple real estate agents can market and show the property concurrently.
Each agent operates independently, and there is no formal agreement or coordination between them regarding the property’s sale. Commission payment is contingent upon procuring cause; only the agent directly responsible for bringing the buyer who closes the deal receives a commission. This commission is typically a pre-agreed percentage of the sale price, often ranging from 3% to 6%, paid directly by the seller to the procuring agent.
A significant characteristic of open listings is their general exclusion from the Multiple Listing Service (MLS). The MLS primarily lists properties under exclusive agreements, which grant an agent the authority to cooperate with and compensate other brokers. Consequently, properties with open listings usually do not receive the broad exposure that MLS inclusion provides, as they lack the exclusive authority typically required for entry.
How Open Listings Operate
The operational flow of an open listing begins with the seller making their property available to various real estate agents. This can be done by informing agents of the property’s availability or through a non-exclusive agreement. Agents interested in showing the property typically engage directly with the seller. Unlike traditional listings that might involve formal referrals through an MLS, agents often find open listings through their existing networks or by direct contact with the property owner.
Marketing efforts for open listings are often limited and rely heavily on the individual agent’s initiative. Since there is no exclusive agreement, agents may invest less in broad, coordinated marketing campaigns compared to exclusive listings. Instead, marketing often involves direct outreach to their client base or limited private promotion, as the agent is only compensated if they are the procuring cause.
When an agent brings a buyer who ultimately purchases the property, the sale proceeds, and the commission is paid directly from the seller to that specific agent upon closing. If multiple agents are involved, only the one who effectively closes the transaction receives the agreed-upon commission. The seller often plays an active role in marketing and showing the property themselves, as they retain the right to sell it independently without owing any commission.