The Real Estate Exclusive Right to Sell listing agreement brings numerous advantages to the sales process, even though many property owners may think otherwise. In this article, we will explain how the Exclusive Regime works, the differences from the Open Regime, and the advantages and disadvantages of each sales format.
It’s natural for many property owners to think that by granting exclusivity to a single broker, they would be limited in exposing their property and, consequently, missing out on business opportunities.
It’s precisely the opposite!
Do you know the saying “A dog of two owners dies of hunger”? The concept also applies to the real estate market.
Keep reading to understand why the Exclusive Right to Sell listing agreement is considerably better than other sales regimes.
What is the Exclusive Right to Sell Listing Agreement?
The Real Estate Exclusive right to sell is celebrated between an owner and a real estate agent, where the owner grants the agent exclusivity in mediating the sale or lease of the respective property for a specified period, usually 6 months. During this period, therefore, the owner cannot enter into similar agreements with other agents. Thus, during the stipulated contract period, the mediation service is exclusive to the agent with whom the agreement was made.
The clauses that make up the contract can be negotiated between the owner and the real estate agent to define the duration, commission, and which services are provided by the mediator.
IMPORTANT: Signing a contract under exclusivity does not mean that the contracted real estate agency is prohibited from sharing the sale or lease with other competing real estate agencies. The exclusivity relates only to the promotion of the sale. In situations where other real estate agencies become aware of the property, the commission is shared without altering the commission already agreed with the owner. Understand in this article why sharing is important in the process of selling your property and why you should not prefer real estate agencies that do not adopt this practice.
Is it possible to terminate the real estate exclusive right to sell?
Yes, termination of the real estate exclusive contract is possible. In this situation, both the agent and the owner must agree to the termination, or it must be noted that the owner has withdrawn from selling or leasing the said property.
It is also possible to include in the contract the conditions for termination, including with a penalty clause.
Can the owner sell or lease the property directly during the exclusive contract period?
During the contract period, the owner is prevented from promoting the sale or lease of their property, unless a potential buyer contacts them directly, without the mediation of another real estate agent. These are usually situations where a friend or relative becomes aware of the availability of the property on the market and, due to easy access to the owner, agree to the deal privately.
What is the Open Regime?
In the Open Regime, the owner enters into contracts with various real estate agencies, authorizing them to promote the sale or lease simultaneously. In this situation, the owner will receive proposals from various real estate agencies and may choose the one that best suits them.
At first glance, this format seems more interesting since supposedly the owner would receive more proposals and have more exposure of their property in the market. This understanding is not correct and, contrary to what is imagined, it brings numerous risks and disadvantages to the mediation process.
Understand better in the next topic!
Open Regime Vs. Exclusive Right: Which is better?
Promoting the property with various real estate agencies (Open Regime) means having numerous different ads for the same property spread across the internet, on various real estate websites, real estate portals, social networks, among other channels of dissemination.
Put yourself in the position of a buyer, doing research on the internet, and finding the same property advertised in several real estate agencies, with different texts, different photos, and sometimes different prices. Some questions that may arise: Why is this property being advertised in so many real estate agencies? Can’t the owners sell? Is there a problem with the property?
Such a situation creates suspicion!
A practical example…
Recently, we received a house for sale in the Open Regime here at the real estate agency. Regardless of the lack of exclusivity, we always take professional photos of any property we work with.
“A picture is worth a thousand words,” and we know, from over 15 years of experience in the global market, that it’s the photos that “sell” on various digital channels.
However, our strategy was compromised!
Because it was a sale in the Open Regime, the same house was being advertised by another real estate agency with poor-quality photos. The ads are listed close together, depending on the search on various classifieds. The buyer, upon viewing the results, will notice that the two ads are for the same house. However, all the positive impact we tried to create was drained due to the poor photos right below, from the ad of another real estate agency that did not do a professional job.
In this situation, everyone loses!
“A dog with two owners dies of hunger“
In the introduction to this article, I mentioned the saying “A dog with two owners starves.”
This is an analogy to the Open Regime of mediation, where several agents would work on the sale or lease of the same property simultaneously.
Real estate agents, aware that the property is being intermediated by other agencies, will not allocate resources for marketing and nor will they have enough time to promote the property, as they will also be marketing a competitor’s product.
Promoting a property requires professional photos, professional videos, hiring drones to make impactful videos on social networks, resources in paid advertising on Facebook, Instagram, Google Ads, local leafleting, home staging, among other actions that highlight and bring visibility to the property in the market, making the property sell faster and at the best price.
How many real estate agents will be willing to execute all the mentioned actions above, aware that the same buyer, upon discovering the property in the market impacted by the marketing that the agent paid for, may choose to access the owner through another real estate agency, where perhaps a friend or relative works?
The answer is: Very few!
Here at CAP International, for example, we offer 2 sales plans to the owner. One for Open Regime and another for Exclusive Regime. Even in the Open Regime, we work with various marketing channels, with great exposure to clients from Portugal and Internationally, as we are a global agency with presence in the USA, South America, and Europe. Want to know our Customized Sales and Lease Plans? Click here to access.
Advantages of the Real Estate Exclusive Right to Sell
1 – Greater Exposure of the Property in the market (Greater investment in Marketing)
Contrary to what many may think, the Open Regime does not bring greater exposure to the property. It is precisely the Exclusive Contract that brings greater potential for highlighting the property. This is because, as mentioned earlier, the real estate agent in the Open Regime will not allocate the necessary resources and efforts for disclosure. The fact of being in several real estate agencies will only bring more results of the same property in the same search result.
Imagine a buyer looking for a property with “X” bedrooms, in region “Y”, in the price range “Z”. The result will be the same whether the property is in the Open or Exclusive Regime. The only difference is that, in the Open Regime, several ads for the same property will be listed one below the other, with all the disadvantages that this conflict of information can bring, as already explained.
In the Exclusive Regime, on the other hand, a single strategically elaborated ad, with professional photos, and convincing and unique texts, will be shown for that property. Not to mention all the investment in digital and traditional marketing that the real estate agent will be motivated to do, since the contract is exclusive.
Therefore, the ideal is to find a single experienced and trustworthy broker in your area and sign the exclusivity right to sell agreement with them.
Here at CAP International, when we receive a property to be worked on exclusively, we spare no effort and resources in marketing to strategically and efficiently promote the property, in a true partnership with the owner.
2 – Presentation to the market
When a property is made available on the market, it brings an appeal of “novelty / new product” with all the differentials that a launch has. There is a sense of “scarcity” characteristic of any real estate market, where attentive buyers ready to buy, upon becoming aware of the property, think “A property has just emerged in the market! I need to hurry to talk to the real estate agent before someone buys or leases it.”
At the same time, the property is still “free” of negative images, since it is new, few know it. The property, therefore, brings a “premium” potential right at the beginning it is put on the market.
All these sensations and differentials, brought by the launch, are drained as soon as the buyer sees the property on various portals, with different information, advertised by several real estate agencies, with poor-quality photos and outdated or contrasting information between the various ads.
The Open Regime certainly is not the most efficient way to present the property to the market.
3 – Focus
The Exclusive Regime motivates the real estate agent to allocate focus and time to the sale of the acquired property. Without the competition of other real estate agencies, the agent can focus on the best sales strategy and not simply on a price war or predatory strategies with the sole aim of winning “the race,” in a frantic way.
Contrary to the false perception that the Open Regime can increase the chances of sale, real estate agents tend to focus, obviously, on the properties that they have exclusively in their portfolio.
4 – Faster sale
Due to sales efforts and investment in disclosure, the average selling time of a property under exclusivity is shorter. It’s worth remembering that exclusivity contracts are usually signed for a period of 6 months. This period is already the average time a property in Portugal is sold. It doesn’t make sense, therefore, to put the property in several real estate agencies imagining that this strategy will make the property sell faster.
5 – Privacy and control of clients
Privacy during the sales process is highly valued in Portugal. Opting for the Open Regime, in this sense, is totally inconsistent. By entrusting a property to a single experienced broker, you will preserve this privacy, as well as promote better qualification of potential clients.
Imagine, in an Open Regime, the number of unqualified clients coming from various real estate agencies, without the necessary qualification and selection of leads (clients). This situation will only bring unnecessary visits and speculations about the property on the market.
About CAP International
CAP International is a global real estate agency specializing in Portugal. If you are interested in selling or leasing your property in Portugal and want to learn more about our Customized Sales Process, contact us now and chat with me on WhatsApp: +351 91 252 9806 (Bruna Barros).