Sunday, July 24, 2005

Beware of real estate agents who say that 'exclusive agency' is the way to list your home!!

A troubling trend in selling homes in the DC area has emerged (especially in the Georgetown area)....Some real estate agencies have convinced their sellers to list their property with their agency under what is called an exclusive agency listing. This means that only the agency that lists the home can bring buyers and sell it. So if Agency X signed you up under this type of agency, they would only allow agents from Agency X to show the home. No agent from the multitude of other companies would be able to get into the house. [Don't confuse this with exclusive right to sell, which only means that your agent will get the commission available for selling your house no matter who shows it (and generally share the commission with the buyer's agent). The showings and potential buyers in this case are not restricted by agency at all.]

What is exclusive agency such a bad deal? Listing your home under exclusive agency means that a very small percentage of people will see your home. Your agent will turn away people at an open house if they have a buyer's agent from another company and will not permit any other showings. The fewer showings you get, the less chance you have at selling your home in the least time for the most money possible.

"Are you crazy?? Why would I ever agree to such a thing??" Some agents can be quite convincing! This also happens more often with more expensive listings. An agent will tell you that you don't want a bunche of people traipsing through your house, that you have such a special house with expensive things in it that you want them to screen everyone that comes through the door and that they are sure that they can sell the house by using only the other agents in their office. They will say that their agency has cornered the market on the "right buyers". When they say all of these things, they will omit telling you that it will severely hurt the market exposure of your house, which only hurts you in the long run. Even in my office, where we know this has happened, there are documented cases of buyers who would have paid more for a property but weren't allowed to because they didn't have an agent from the same agency (and buyers are bound to use their agent by a legal agreement just as sellers are). The reason that an agent would try to convince you of this is because they want buyers to come directly to them so that they (or their office) can collect both sides of the commission.

The bottom line is that you want your house to be seen by as many people as possible. If you are concerned about people coming through your house, you can make arrangements with your agent to be present at every showing, to not hold an open house or to have extra agents around the house if they do hold an open house. If an agent is really working in your best interests, they would NEVER suggest limiting the scope of the houses marketing or potential viewers. And NO agency has cornered the market on a certain price range of buyer, so there is no way they could have the house shown to the most people under exclusive agency.