'Exclusive' or 'Not Exclusive', that is the question!

Stephan Schade from Twin Key Real Estate offers his professional advice on whether or not you should use multiple agents to sell your property

So I have found the professional broker or even brokers I trust, the next question is now whether I should sign an exclusive contract with one broker or a not-exclusive one with several brokers? Also here there are arguments for and against, first a small overview:

EXCLUSIVE

Advantages:

• Only one contact person, all activities bundled in one person.

• No disputes possible regarding the distribution of the commission.

• Agent is more motivated in the sale as he knows that he will not "go away emptyhanded", his investment of money and time in the property will "bear fruit" in any case. He feels responsible for the sale.

• No multiple listings on the internet, most buyers interpret these as negative, along the lines of "why does the property need so many estate agents? There must be something wrong!"

• Avoidance of irritation for the buyer due to different details (one estate agent lists different square metre figures than the others, or even worse, several different details regarding year of construction, number of rooms, garage, etc.; worst case: different prices!!!). All this leads to potential buyers feeling deterred and ruling out the property directly!

• Usually lower commission than with nonexclusive contracts.

Disadvantages:

• Bound for the duration of the contract, even in case the broker turns out not to be the right one (e.g. does not work professionally).

Not Exclusive

Advantages:

• In the event that a broker turns out not to be professional, you have direct alternatives. Disadvantages:

• As a rule, higher commission than with exclusive contract.

• Several contact persons. In case of changes, you have to inform all agencies and check if the changes have been implemented (e.g. price changes, etc.).

• There are often discrepancies between the different agencies in the description of the property (different square metres, year of construction, prices, etc.). This often leads to exclusion among buyers (they get confused about the different infos and stay away from the property).

• Multiple listings on the internet (buyers: "why does the owner need so many agencies? Something is wrong with the property").

• Commission disputes possible: buyer contacts different agents for the same property and even does viewings with them. Afterwards both agencies claim the full commission as it is "their" client. Already happened more than once!

• Each agent feels no responsibility, "if I don't take care of the sale, well then one of the other agencies will."

• Not much motivation: the agent knows that the probability of selling the property decreases with each additional agency: with two agencies it is 50%, with three agencies it is 33%, with 4 agencies it is only 25%, etc.

As you can quickly see from the lists, the arguments "pro" exclusivity outweigh the arguments for non-exclusivity, but unfortunately there is still a lot of resentment towards an exclusive contract, quite unjustifiably as you can see above.

As a big argument against exclusivity and in favour of non-exclusivity, sellers always cite the fact that the circle of buyers becomes larger with each agency, because each agency has "its own" buyers. In order to evaluate this argument, one needs to know how buyers behave and where they "hang out." The vast majority of buyers nowadays move around on the internet. The times when prospective buyers used to press their noses against the window panes of the agencies are long gone. The internet is THE medium, also and especially for buying real estate. This is especially true for international buyers, i.e. prospective buyers who do not come from the country where the property is located. In our case (here in Portugal) we are talking about buyers who come mainly from Central and Northern Europe, but also from Eastern and Southern Europe, North America, South America, partly also from Asia and even Africa. More than 90% of these buyers do not know any local estate agent with whom, on top of it, they may have been working for many years. The customers search for suitable properties on property portals, by which agent these are offered plays a rather subordinate role (even if of course a certain percentage prefers well-known brands, this does not mean that they buy exclusively through them; only a very small percentage (in the single-digit range) do so). This in turn means that buyers do not feel tied to a single agent, but on the contrary, are completely free to search for their dream home, regardless of which agent it is listed with. Let's assume, however, that a buyer has already looked at several properties with an estate agent and trusts him. He now finds a suitable (exclusive) property on the internet with another estate agent. There are now two possibilities that can happen: 1) he contacts the exclusive agent and buys through him, or 2) he contacts "his" agent and asks him to help him to buy this property. What definitely won't happen is that this buyer will forget about his dream home and will just limit himself to the offers of "his" broker. Either way, the seller will not miss this buyer, regardless of whether he gives his property exclusively to one agent or offers it through 10 agents. However, it is more likely that the buyer will refrain from contacting him if he notices that the same house appears x times with different estate agents ("why does the seller need so many estate agents? There must be something wrong with the property"). Exclusivity does not mean "being tied to an estate agent", but "exquisite", "extraordinary", "special". And who doesn't like to buy something exclusive, special, extraordinary, exquisite? It is also quite often cited that with an exclusive contract, the owner can no longer sell to friends, acquaintances, etc. himself. My recommendation: Simply inform all potential buyers (the aforementioned friends, acquaintances, family, neighbours, etc.) and if no one comes forward within 3 or a maximum of 4 weeks, then give it exclusively to an estate agent, because then no one from this circle is interested. However, if someone does come forward, then most estate agents are quite prepared to take this interested party out of the exclusivity (i.e. you can sell the property to this buyer without having to pay the commission), or you sell directly beforehand without involving an estate agent. So in the end everybody must decide on his own what to do, but in terms of advantages and disadvantages it seems to be clear which is the better way regarding exclusivity. I wish you all the best for 2023 and a happy deciding!

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