You’ve made the decision to sell and now it’s time to find a buyer for your home. The typical route would be to hire a real estate agent and get your property listed on the MLS (Multiple Listings Service) with Realtor.ca. Your home will be showcased to all the interested buyers in the market and you’ll hopefully get a lot of competitive offers. Especially in Canada’s housing hotspots, high buyer demand and a limited supply of homes could mean a bidding war which has the potential to drive the sale price of your home skywards.
Sounds great, but not so fast. There’s another way to sell your home, and depending on your circumstances, it might be a better option for you. Before listing your home for sale, you should consider the Exclusive Listing.
What is an exclusive listing?
An exclusive listing is when the seller enters into a listing agreement with an agent/brokerage, but the listing does not show on the MLS or Realtor.ca initially.
Instead, your agent will advertise your home to a selected buyer pool for an agreed period of time before placing it for sale in the greater market. They will have exclusive access to find a buyer for your home, with no other agents bringing buyers to your doorstep.
An exclusive listing is sometimes also referred to as a “pocket listing”.
Why choose an exclusive listing?
It might seem counter-intuitive to market your home to a much smaller audience and forgo a potential bidding war, but this option is preferred by some sellers.
More often than not, the main reasons sellers choose an exclusive listing is for confidentiality or to “test sell” their home at a higher price.
Sometimes the benefits of an exclusive listing mean it’s the right way to go:
A quick sale is important
Selling a home can be a lengthy process – preparation, staging, marketing, open houses and more all take time. An exclusive listing can bypass many of these typical requirements, speeding up the home sale for sellers in a rush. If the agent has potential buyers lined up, an exclusive listing can get your home sold very quickly.
Privacy of sale
Some sellers may want to keep the sale of their home private to avoid attention from people, their workplace etc. Some sellers also simply don’t want to go through the process of an open house and show their home to masses of people.
Using an exclusive listing to pre-market a home
A signed exclusive listing agreement enables your listing agent to pre-market your home to their selected list of potential buyers, privately online or under a coming soon label. This will let buyers know that the listing of this home is upcoming and can generate interest.
Sellers want to keep an attempted sale off the MLS
After listing on the MLS there will be a record created letting future buyers know about the home’s sale history. Sellers often use exclusive listings to price test their home (typically using a higher-than-value figure) while keeping the attempt off the records of traditional databases such as MLS in case the right offer doesn’t arrive. Sellers who want to re-sell a home immediately for profit or sellers in a slow market might use an exclusive listing to their advantage this way.
An exclusive listing as a price test also provides sellers information about the actual value of their home and the option of making repairs or upgrades to the home before listing on the MLS. Overpriced listings may be significantly disadvantaged during the bidding process as several buyers who would have otherwise put a bid for the home do not. By testing a price with an exclusive listing, you will be able to get a better sense of which price will get you the optimal result when/if it is listed on MLS to the general public.
You may save some commission
Exclusive listings are still subject to similar commissions as MLS listings; however, if your agent is able to find you a buyer at a price you are happy with, they may agree to a reduced commission for the deal. In this case, the agent makes more commission as a result of representing the buyer and seller while the seller pays less total commission as there is only one agent to the deal when compared to your typical transaction where the buying and selling agent split the commission.
Restricted showing access
Once listed on the MLS, the property must be available for potential buyers to view. Sometimes renovations may still be underway, the seller is on vacation or other factors might hinder open showings of the home, and an exclusive listing means the home can be for sale without the intrusion of many visiting buyers. This could be an especially appealing benefit as the COVID-19 pandemic continues to limit physical interactions.
Disadvantages of exclusive listings
While exclusive listings suit the needs of some sellers, the large majority of homes are sold through traditional listings with the MLS. Exclusive listings do work well but the circumstances need to be right for this type of listing to be preferred.
You may not get the best value for your home
The highest sale price for your home is usually only realized when your home is available to the whole market. Potential buyers ultimately decide what your home is worth and it’s common for the bid value to rise through a bidding war if multiple buyers become involved.
An exclusive listing means that there will be a lot fewer eyeballs on your property and the likelihood of a price raising bidding war are slim to none.
You need the right agent to pull off a successful exclusive listing
Your real estate agent is the key to successfully selling your home through an exclusive listing. The sale relies heavily on their marketing skills and exclusive listing network because your home is not being put on the open market.
You really need to make sure that your agent has the skills and experience to attract the right offer for your home. The best tool your exclusive listing agent can have is a well-curated list of potential buyers that are interested in homes like yours and ready to buy. In addition, there are several platforms other than MLS where the exclusive listing can be published and your agent should take advantage of those.
Always speak with potential agents about their past experiences and level of success with exclusive listings and ask for an outline or plan of how they’re going to sell your home. Also, don’t be afraid to ask for references and follow up on them.
So, what type of listing should you choose when it comes time to sell your home?
This is a question that many sellers ask themselves before they put their home up for sale. An exclusive listing sounds tempting because there is less preparation and less hassle, but it’s also a risky move because you might not get the highest possible bid for your home.
The best thing to do is get advice from a real estate agent who has experience with exclusive listings in your area. They’ll be able to better assess the circumstances surrounding your home sale and guide you in the right direction.
Visit our Find An Agent page and we’ll help you find the best real estate agent for your home sale.