the Five Different Ways To Sell Property
By Simon Harrison
October 2007

Open Listing
Exclusive Agency Listing
Exclusive Right to Sell Listing
Simon's Local Listing Service
For Sale By Owner or FSBO

The way that works best these days is the most common, and that's to list it with a broker. A listing is a form of employment agreement between brokerage firm and their client, who is most often the seller. There are several different ways to do that. 

1- An Open Listing is where the seller lists it with one or more different brokers, and if one of those brokers brings a buyer, that broker gets the whole commission.

2- An Exclusive Agency Listing is where a seller lists it with just one, who will share it with other brokers, and the agreed upon commission will also be shared with other brokers when it sells. 

3- An Exclusive Right to Sell marketing agreement. Same as the above with two main differences. With an Exclusive Agency listing, you can sell it yourself without owing the broker a commission. This can happen only if the buyer hasn’t been procured in any way by anyone in the brokerage community. An Exclusive Right insures that the broker will handle everything as well as protecting that broker’s commission, no matter who buys it. 

4- Simon's Local Listing Service- This is a way to reduce the cost of selling the house as well as the price of the property itself. This form of listing is now available to the public, but in the past it has often been reserved for foreclosures, court ordered sales, bulk liquidations, (REOs) and other must-sell scenarios.  This is the only way to move a property for less, while using the entire brokerage community's resources. To be fair, this form of listing isn't for everyone as it involves up-front fees. More on this after we describe the last way, and that's by owner.

5- FSBO-For Sale By Owner, or 'Fizzbo'. Sellers can do it themselves by prepping the house, pricing it right, taking out ads, building a website with some pictures, conducting frequent open houses, qualify leads, conducting all the tours for prospective purchasers that come with or without brokers, negotiating a deal as well as all the paperwork, arranging appropriate inspections, and getting to the closing table. 

The reality about doing it this way is that sooner or later the overwhelming majority of Fizzbos end up selling through a broker. It's true that occasionally we hear about a homeowner who sold well by doing it themselves. The ones that don’t use a broker often get less than market value because they’re sold to sharp investors (sometimes brokers themselves), or they don’t get the right exposure to all the buyers, reducing the pool of available bidders. After all, some people do win the lottery, and anyone can get lucky. People who do are often capable and experienced enough to handle any and all stages of a property offering: showing, negotiating and contracts, right to the closing of a sale.  The fact is very few people really are that capable, and to be fair, that includes some of the agents and brokers in the business today.

The most common way to sell a house today is an Exclusive Right because many people want a broker handling any and all of the details from beginning to end. To understand how you can save money when selling your property, you first have to understand how real estate commissions work. In a traditional real estate transaction, there are two agents, or sides, in a deal. There’s the list side, and there’s the buy side, which is almost always an equal split arrangement between firms. The commission is pre-set by the sellers when sellers list the property (pardon me if you already know all this).

Anyway, the buy side and the sell side each earn a percentage of the overall home price. When listing a property, the seller sets this percentage, known as the commission, earned by each side. Traditionally, the seller sets a commission of 6%, with 3% going to the seller’s agent and 3% going to the buyer’s agent. For example, on a traditional $1,000,000 transaction with a 6% commission, it’s $60,000 paid at closing, $30,000 to the list side and $30,000 to the sell side. In this traditional arrangement, the commission is already included in a home’s price, at listing, so a buyer who pays $1 million yields the seller $940,000. This amount may seem small in comparison to the overall value of the home, but it is often large in comparison to the amount the home has appreciated since its last sale. The buyer is the only person bringing a checkbook to the closing, and all commissions ultimately come out of the money the buyer provides. 

Let's not forget that these are commodity transactions, which are  almost always driven by money. Since we don’t want to reinvent the wheel, we just want to apply Harvard Business School basics that say the only way to compete in commodity transactions, is to become more efficient, and bring down costs. 

We are well-versed, experienced brokers and agents. With any listing we service, we feature the property on 20 different Websites, we print and distribute brochures, we conduct open houses for the brokerage community as well as for the public, and we provide the same effective, experienced, guidance, advice, meaningful suggestions, advertising and services that traditional agents offer. Remember, we’re not purists or radicals, we’re just making appropriate adjustments that changes in the industry warrant, and consumers on all sides have been demanding. We sold that sample $1,000,000 house for $360,000 ten years ago. The price of technology has gone up as well as everything else, (like our premium location on the Long Wharf), but we don’t need triple the commission to sell it again. 

To conclude the listing choices segment, keep in mind that more information often brings up more questions, and all the answers are important ahead of big decisions.  Please feel free to call Simon Harrison Real Estate at 725-HELP or Simon’s cell phone at (917) 822-6652 if you have any questions or comments about these different listing programs.