Exclusive Listings Revisited Part 3 of 3

Disclaimer: This program is no longer offered by Guys In The Zone Real Estate. We have closed our doors and are working in tandem now with another company that does not recognize this method of listing properties.

This series of articles is all about options for selling a property in Costa Rica.

Negotiate a fee for a marketing service.
Decide what the marketing fee will be.

Now here, in Part 3, we are going to discuss an un-orthodox approach to selling a property in Costa Rica’s non-MLS marketplace. The incentive for doing this is the weaknesses, or flaws that were reviewed in Part 2 of our attempts to imitate the MLS of other countries.
I have been working in real estate here in Costa Rica’s southern pacific zone for years, and have always felt that the exclusive listing was a nearly sacred thing. It puts a tremendous responsibility on the agency that has the exclusive, but is also demanding on all of the agencies in that they must ignore the fact that the commission on this property is shared, when the majority of properties in their inventory are not.

I have been scratching and thinking about this topic and here is what I’ve come up with.

The Real Estate Agency’s Objective:
What we want to do is offer to sellers a better service, and in the process improve the professionalism of our industry. This is particularly appropriate when the seller lives out of Costa Rica and doesn’t want to spend the majority of their vacation time here visiting and re-visiting the real estate agencies in the area to make sure that everybody has the listing and know the property etc…

Look the other way!
How ‘bout instead of looking to the MLS system for the model of how to offer this service, we look no further than our own marketplace? I contend that when we look to the model of the MLS system, we end up actually working against our objective of helping the seller. How about instead of that we simply offer a service for a fee, like every other type of service business, and leave the commission, for the most part, unaffected?

I say “for the most part” because I think that we can reduce the commission paid out to 7% (1% point of the normal commission) and not affect the incentive of the various real estate agencies. I think that they are going to be nearly as “in” as if the commission was the full 8%. So the extra 1% can flow to the “Marketing Agency” as a starting point of compensating them for their marketing services. On top of this 1%, seller and agency will negotiate a flat fee to be paid to the agency at the time of sale. So it ends up being on a per case basis.

The Seller May Want:

  • only to  deal with one agency.
  • the Marketing Agency to accompany all of the showings.
  • more publicity than just the usual website display.
  • their Marketing Agency to visit and re-visit the agencies to make sure that the various websites have the listing and perhaps have a flyer printed out in their window and see if there is any input from the various agencies on how to make the listing more sellable. Feedback from showings is valuable information.
  • to be represented through the due diligence period and the closing.
  • And, any number of other possible services can be added into the mix in this model. The fee for services will just need to be negotiated and both parties agree to the terms and the payment is made out of the funds from the sale.

Conversely, the seller may just want the agency to distribute a CD with photos, survey and description, as well as a listing agreement, and then they, the sellers, will do all the rest.

Obviously, the result of this is that the seller pays more than if the seller were to do an open listing. But, in our non-MLS marketplace here, we are talking about a very real service being rendered while minimizing, if not eliminating any negative effect on the sale of the property.

A comparison $125,000 property deal.

Open Listing Procedure
The Open Listing commission of 8% is $10,000

  • Seller takes photos
  • Seller does a creative writing description of the property. If the property is a house, this description includes all the details of the house: number of bedrooms, baths, square feet, access, Home Owners association, taxes, water service and fees, who to contact with offers, how to access & show the house etc…
  • Seller scans survey
  • Seller burns all the above onto a CD, or sends it out as an attachment to an e-mail. This lacks the personal touch of a visit but is doable.
  • Seller distributes this to the various agencies
  • Seller sets up either an open house or sets up viewing appointments with each agency individually
  • Seller visits the various websites to see if the property is there
  • Seller calls or visits regularly to keep the agents in the various agencies mindful and present on his/her property.

Marketing Package Listing Procedure

  • The Marketing Package commission is 8% but it is divided 7% and 1%.   7% of $125,000 is $8,750 and is paid to the selling agency.  1% is $1,250 to be paid at the time of sale to the Marketing Agency.
  • Seller and Marketing Agency negotiate for what services the seller would like and how much the flat fee for those services will be when the property sells.
  • Agency may agree to do all of the above services listed in the Open Listing for an additional fee of $3,000. This plus the $1,250 that comes from the 1% difference in the commission totals $4,250. When compared to the MLS model, the seller is incurring an additional fee of $3,000, but the incentive of the various agencies is not reduced due to a shared or cut-in-half commission.

I find myself using as a standard the amount that would have been paid if we were to have still been in the MLS model. The amount of commission that each half of the MLS model would be $5,000. In the Marketing Package model, the selling side makes $8,750 and the marketing side makes $4,250. This does in fact look to the seller to pay more. But for that fee he/she gets representation in an international real estate transaction, and he/she gets motivated agents out there selling his/her property.
I’m really quite comfortable with the rustic and funky Costa Rica non-MLS model. I’ve got lots of happy clients who, by means of this system, own their homes and are enjoying the change in life-style that a move to Costa Rica can facilitate.

We’re available to discuss these ideas.  Please feel free to post comments and questions here in our blog, or click on over to our Facebook page.

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