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Every day, there are more than 14,000 homes sold in the United States, each deal utilizing different real estate listing options.
Many of those homes are sold through a single realtor who manages the process.
Others are sold by owner.
There’s a third, lesser-known option where multiple agents are allowed to advertise the property, and the agent who finds a buyer and closes the deal receives the commission.
It’s known as an open listing.
In this article, we’ll break down the nuances of an open listing to help you decide if it’s right for you.
What is an Open Listing?
An open listing is a real estate listing option in which the person selling property allows multiple real estate agents to advertise the property in an effort to sell it.
While traditional listings involve a single agent who represents the seller responsible for finding a buyer, an open listing allows each agent who is working with the seller to use their own advertising techniques and network of potential buyers to sell the property.
Since the most important thing to an investor is access to information, open listings mean that there’s a good possibility that the agents a real estate investor has already worked with may have access to more listings than usual, providing a larger pool of properties to choose from.
Additionally, an open listing can help you with your investment property when you’re ready to sell it.
Sure, you could allow one agent to market, show and ultimately sell the property.
However, an open listing allows you to list the property with multiple agents, meaning they are all motivated to sell the property as quickly as possible in order to earn the commission attached to the property.
As an investor who is selling a property, open listings motivate all the agents that you’re working with to act quickly.
Advantages and Disadvantages of Open Listings
The pros and cons associated with an open listing vary depending on which side of the deal that you’re on.
Buying a Property
If you’re looking to buy a property that is an open listing, you may need to move quickly because there might be more competition for the property, given that there are several agents advertising it.
However, this increase in advertising may also help you as a buyer, because agents who you work with may contact you early, allowing you to find out about the listing before it becomes heavily advertised.
Selling a Property
Having multiple agents advertising the property and working to sell it can lead to a bidding war, which can, in turn, result in a higher sale price.
Open listings are great in slower markets, for example, an open listing may be a good idea in Little Rock, Arkansas, where it takes an average of 41 days to sell a house.
One disadvantage when selling a property is that in some cases, given the competitive nature of an open listing, you may have to offer a higher-than-normal commission rate to get agents to accept an open listing.
Open Listings vs. Other Listings
There are multiple listing options, and it’s important that you know how all of them function to help decide what’s right for your situation.
One of the most common types of listing, an exclusive listing is where one real estate agent is contracted to advertise the property and find a buyer.
A pocket listing is a type of listing that isn’t advertised on a local MLS; it’s an exclusive off-market property listing.
With a pocket listing, the property owner first informs the real estate agent about their intention to sell their property and explains that they do not want it to be listed in the MLS or any public domain.
Because of this, the status of the property listed for sale is kept private.
The National Association of Realtors prohibits members from using a pocket listing, so if you want to use this listing option instead of an open listing, you’ll need to find an agent who isn’t a NAR member.
Open Listing: The Bottom Line
Buying or selling a property as an open listing has its own share of pros and cons.
Ultimately, the choice to use an open listing to buy or sell a property depends on your own investment strategies and the market that you’re investing in.
The best way to maximize your profits and minimize your risk as a homeowner or real estate investor is to increase your real estate education, and that starts by understanding all the options for your particular real estate situation before making a final decision.