I have written about the nature of our marketplace and the listing options open to sellers. Its not a pretty site in this non-MLS (Multiple Listing Service) marketplace. The seller is confronted by the decision to personally market the property to each of the real estate agencies in the area (Open Listing), entrust one agency to the task (Exclusive Listing), or go it alone with a For Sale By Owner. Here are the pro’s and cons of the options.
Open Listing: this is the type of listing that is considered the norm here in the non MLS model. The seller walks into my office with a packet of information on their property. I ask a number of clarifying questions: access, water, electric, phone, Internet, view, privacy and of course, price. Provided the answers to these questions indicates that the property is sellable for what the seller has in mind price wise, we set up a time to go and view the property. We visit the property, take photos/videos and then the listing goes onto my website.
This generally pays 8% commission to my agency.
The seller then goes down the road to the next agency and does it again.
Pros of the Open Listing: The agencies are motivated by the full commission. Right now the inventories of the various agencies are ripe with great listings. When a prospective buyer comes into the office, or starts up a dialogue via e-mail about their search for property, the well-intentioned, but commission motivated agent is going to gravitate towards the full commission listings first. This is a weighty point that will not be fully dealt with until we have a fully functioning Multiple Listing Service here in Costa Rica.
If you think it through, the seller has no actual representation in the marketplace. For that matter, neither do the buyers. You’ve got seller, buyer, and a commissioned sales person in the middle trying to make a deal happen so that he/she gets paid. Not the best of business models, but it’s ours and somehow it works.
Cons of the Open Listing: Many of our sellers don’t live in Costa Rica and don’t spend a lot of time here. For them to take the time necessary to print out the necessary information, burn photos and scanned documents to disk, and then visit each agency is well beyond most people’s tolerance. The determined seller will likely find that they spend their entire time here in the simple act of promoting their property to the various agencies. Then, there is the follow up.
Keep in mind that in an MLS market place, the listing agent is assured of getting paid for their time and expense to market your property. The MLS model is set up so that the full commission is split into two usually equal parts, and the listing agent receives half of the commission no matter who sells it. This works to motivate the listing agent to put up a sign, do an open house, promote the property on the Internet – maybe even run an ad in an appropriate magazine or newspaper. With the Open Listing option, the time the agency spends to list a given property can easily go un-rewarded. Consequently, sellers receive cursory service. If the agency feels in any way that there is a problem with the property, or that the seller is asking too much for the property, or whatever, the listing is going to languish in the “To Do” pile on the agent’s desk, necessitating numerous follow up calls, e-mails, and visits until the seller sees their listing show up on the agency’s website.
Representation (or lack thereof): In the Open Listing, there is no representation available to the seller. I tell my sellers, “don’t tell me anything that you don’t want the prospective buyer to hear”. We are unregulated and can say anything we want, or conversely, not say anything we want (the latter frequently being the more important point). A full disclosure representation of a property to a prospective buyer is entirely up to the honesty of the agent showing the property. The discreet handling of seller information is also entirely up to the agent. Buyer/Seller representation is a huge hole in our non-MLS business model. The really good agents in our area fill the hole with the oh-so-hard to detect quality we like to call: integrity.
There is a current effort in Costa Rica’s southern Pacific zone to deal with the problems associated with exactly this point: the plight of the sellers. The effort is called SPAR, Southern Pacific Association of Realtors. This is a developing group of local real estate agencies who get together once a month to discuss how to improve our industry by working together. One of the top priorities for SPAR is going after the deficiencies of our market place caused by the absence of an MLS, as well as the “no certification required” status of the industry (anyone can be a real estate agent in Costa Rica). What the presence of SPAR does is gives the Exclusive Listing a bit more teeth. Not quite to MLS levels, but certainly an improvement.
This leads nicely into the next point which is to say, stay tuned for the coming consideration of the Exclusive Listing, and the option of For Sale By Owner.
In preparing this article, I went back through the last several years of articles in this blog. I have written a lot about these points. This article is somewhat repetitive. SPAR is hopefully changing the scene here and so the information is in a state of flux at the moment. If you are interested in some of the past seller related information, please use the tag cloud to the right and click on “Selling Information” or “exclusive listing”
We just got an “Exclusive Listing” for Guys In The Zone that we’re extremely, majorly and very excited about. Check out this video clip and then for more info click here.