If you haven’t read Part 1 of this topic yet, you might want to. You can do so by clicking here. You don’t have to if you don’t want to. This article stands up fine all by itself. However, to get a good understanding of the open listing, which is the most common type of listing here in Costa Rica, you’ll probably want to. All right?
When we last visited, we were left with the cliff hanger – “what is a seller to do if they don’t live in Costa Rica?” The absentee owners don’t have time to go to each real estate agency and distribute photos, write-up, survey and contract with every real estate agency. This could really mess up a family vacation. Not to mention the follow-up-regular-visits to see how it’s going with showings of the listing.
Before going into that and satisfying the “edge of your seat” drama that I have created here with this compelling topic, I’d like to give you a glimpse inside the mind of this Costa Rica real estate agent and share with you an alternate option to what has been the standard practice in Costa Rica for the exclusive listing of a property.
We have always known that the MLS (Multiple Listing Service) market place of the US is superior to the Costa Rica open listing model. In our (Zone real estate agencies) efforts to improve our market, and to offer a better service to both buyer and seller, we have defaulted to imitating the MLS market place, without having an actual MLS. The reasoning is simple: the MLS is a superior model that has evolved over time in response to gazillions of problems and concerns and has resulted in what we see there now: a mature business model that offers representation to both buyer and seller of a given piece of property. So, we try and come as close to working like and MLS without having the actual infrastructure of an MLS.
For various reasons, I’m starting to think that this premise might be flawed. AND it may be that, if we think outside of this box we’re in here, we might even come up with a solution that rivals, or perhaps (could it be?!?) even exceeds the MLS model of other countries. Bear with me here.
How Costa Rica imitates the MLS model…
We take exclusives. That’s how we imitate it. An exclusive listing is when a seller enters into a contractual agreement with an agency, or agent, to list, promote and sell their property. The commission of 8% (normally) is then shared between the listing agent and the buying agent. This split can be 4/4% or 5/3% depending on the agency (Guys in the Zone has generally offered a stronger commission to the buyer’s side in the hopes of motivating the buying side). Click here for a series of articles spanning back over the years that deal with and explain the exclusive listing.
What is achieved with this approach is that the seller gets representation in the market. There is an agent that has his/her best interests at heart. Now when another agent brings a buyer, we have a very close copy of the MLS system where both buyer and seller have representation in the marketplace. Sounds good right? (Representation is obviously somewhat mitigated if the exclusive listing agent also brings the buyer, but this is a wrinkle in any MLS system.)
without achieving the effectiveness of the MLS model
A client comes into the office, or e-mails beforehand, and says that they want an ocean view house in Dominical, Uvita or Ojochal and they have a budget of $500,000. The agent considers the 4 options he has that satisfy this criteria. Three of the listings are open listings that pay 8%, and one is an exclusive listing where the 8% commission is shared with the agency that has that exclusive listing and so it pays 4% to the buying side. Basic human nature – which of these four listings is going to get priority representation by the real estate agent? This is the inescapable flaw of our imitation MLS model. Real estate agents are all paid on commission. Granted, we’d all like to say that we are so righteous that we don’t think about the commission and only focus on what is best for the client – but…
I’d say that this is the main flaw to the imitation MLS model, but there are others as well. All the exclusive agency can do to promote their exclusive listings is inform all of the real estate agencies of their listings, provide them with a write up, photos etc… and then hope that the information provided will get posted to the various websites. The exclusive agent also hopes that the agents in the agencies have the listing in mind when talking with appropriate prospective buyers. The exclusive agent is available to show and educate the other agencies the property and may even be called on to help with showings to other agency’s clients.
I have recently done a check on some of my competitors websites. I looked for my exclusive listings on their sites, and was unable to find them, this in spite of the fact that I have provided the information to the agencies. I’m doing a test now to see if after several passes I can get these exclusive listings posted to their websites. My buddy, (and one of my chief competitors) John Weiland and I have been discussing this topic ad nauseum over the past several months. His company (Coldwell Banker) is very pro-exclusive. They are concerned that the sellers are not getting good representation here in The Zone and see the exclusive listing as the solution to this problem. I noticed the other day when Daveed, John’s partner, sent out an exclusive listing to our agency, he included the words, “please let me know when you’ve got it posted”. Very good. I’ll be checking with Daveed to see how that worked. Rod got right on the listing and posted it to our website, partly because the listing itself is eminently sell-able, and partly because of this caveat that Daveed put into his notice.
Guys In The Zone Suggested Alternate Listing Method.
Click the button for Part 3
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