Several topics came up this week in different situations. They are important and part of the foundation of real estate knowledge and ethics, which helps us navigate the twists and turns of maintaining standards and practices and doing the best job for our clients.
Exclusive Listing instead of Open Listing
Exclusive indicates that the property listing is handled by a single agent. No other agent can show the property (to prospects and agents with their prospects).
This exclusive agent has to present all offers to his sellers and work to obtain the best price and terms for his sellers. An open listing allows an agent to show the property and negotiate a sale. For the seller, it will be necessary to take all the calls or pay someone to arrange the showings and vet the agent’s calls.
Exclusive with one agent responsible and all offers going through her makes for a more transparent system. She is the exclusive gatekeeper allowing other agents to see the properties with their clients and make offers through her to the seller. The property is listed to go into the MLS as an exclusive (one person responsible to the seller) listing. The listing agent is responsible for the information on the property, from size to legal status, and knowledge of what the net proceeds will be for the seller after deductions and credits. This condition allows the listing agent to offer compensation to all agents.
Most of the world uses open listings and not exclusives at this point. The MLS database is expensive and must be maintained.
The biggest confusion about exclusive is that the public thinks the exclusive listing agent is the only one who can show and sell that particular property she has listed—no one else. It is not true that the exclusive agent is the only one who can show and earn a commission. If there is an agent with a buyer, the exclusive broker will pay both sides from the compensation from the seller.
The USA and Canada are the most well-known for exclusive listings. Mexico has exclusive listings in some locations, with a true data base and marketing system for the public.
These MLS databases track the specific property through marketing, offers, and closings. The listing agent has a time limit where only this agent can receive and present offers to the seller, and counsel the seller to accept the best option. With one exclusive agent at a time, the data of sales price and characteristics of the property, such as location, number of rooms, are more accurate and reliable. A true MLS does not have open listings or pocket listings as these categories are difficult to keep simple and have accurate data.
In our market of the Bay of Banderas, the use of exclusive listings has given much better data than the markets without these systems. If there are no true multiple listing services for exclusive listings, the system is a market promotion with no vetting of accuracy or accurate sales prices.
Once we had a true system with data owned by the agents, our market and reputation grew more than we had ever expected.
This article is based upon legal opinions, current practices, and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his own due diligence and review.
