WHY EXCLUSIVE AUTHORITY TO SELL
Selling your home is probably the most important personal investment decision you are likely to make in a lifetime. Therefore when negotiating its sale, you will consider it vital to conclude a successful transaction, measured in terms of the price achieved.
Your choice of estate agent and the method of marketing and selling your property is of paramount importance and will undoubtedly affect the financial success of the sale.
When it comes to deciding whether to opt for the Exclusive Authority to Sell route or to go open agency, the Exclusive Authority to Sell is in your best interests and is unquestionably the wisest choice, as it helps to achieve the best possible price the market will pay.
This is because Exclusive Authority to Sell – permitting only one agent to accomplish the sale – affords the agent the opportunity to work with and for you, never against, without the pressure and inherent disadvantages of several other agents also vying to sell the property.
Open agency may lead to more offers, but it must be stressed that it tends to lower the price of the property, whereas Exclusive Authority to Sell helps you achieve the highest price the market will pay.
Whereas open agency creates competition between agents to sell the property as quickly as possible before anyone else, irrespective of the price, it is the Exclusive Authority to Sell method that allows your agent to create competition between the buyers to buy your home, thereby in most instances pushing the price to the highest levels and the best possible price the market will pay.
In open agency, an agent knows that one of the other agents may take a low offer and try to conclude a sale.
There is not the same incentive for a good agent to take the time to achieve a fair price because he risks losing the sale.
In fact, if an agent refuses to take an offer (even an absurd one), the buyer can go to one of the other agents handling the property. If a sale then eventuates, irrespective of price, the agent who refused to take the initial offer has no legal recourse for commission against the seller or the other agent involved.
Therefore, in open agency agents tend to accept the earliest and lowest offer, as opposed to trying to get the best price.
Anxious to conclude a quick sale, they might even submit ridiculously low offers.
This has the effect of pegging the price of the property at a low level, not only in the marketplace, but in the seller’s mind.
The agent is therefore not acting in the seller’s best interest. In addition, selling your home way below the expected price after hordes of unsuitable buyers have “traipsed” through it may not be the only problem with which the “open agency” seller has to contend.
You could find yourself involved in unpleasant commission disputes – even to the point of having to pay double commission.
The function of the professional estate agent is to test the market on the seller’s behalf to ensure that when you accept a price on your property, you are happy and confident that it is the best the market will pay.
For the reasons previously mentioned, as well as others, this is what Exclusive Authority to Sell helps achieve.
The seller who wants to give an Exclusive Authority to Sell but is fearful of not attracting enough buyers through one agent, can rest assured that – provided the chosen agent puts in the time and effort to market the property and advertises regularly to give it the widest possible exposure – prospective buyers will go to the agents with the best houses – there is little buyer loyalty towards agents.
In the rare instance of an outside agency having a buyer who could be interested in the property and who is not already on the exclusive agent’s books, the two agents generally would get together and share the brokerage fee so as not to prejudice the sale.
Exclusive Authority to Sell is the sensible choice as a much more positive scenario presents itself.
You must remember that there is a basic conflict between buyers and sellers – a seller wants the best possible price – so too does the buyer – but at the other end of the scale!
In the case of the Exclusive Authority to Sell the agent having no fear of loss as there are no other agents involved, can and will refuse to take low offers.
It is only when the buyer realises that he can’t get a ‘bargain’ and, even more important, sees that the agent is convinced that the property is worth more, that in most cases he will go up in price.
This would not happen in the case of an open agency.
Exclusive Authority to Sell allows the agent to devote time and attention to marketing your property to best advantage, thereby making buyers aware of its value.
Another big advantage of Exclusive Authority to Sell is that the agent - again having no fear of loss – keeps the seller fully informed of progress, such as market trends, other comparable sales, buyer’s reaction to the property and ways and means of making it more attractive to them.
This helps you to make the correct decision regarding when to sell and what price to accept .
The “open” agent, pressed for time and fearful of giving away information which may work to the advantage of competitors is unlikely to do this.
In open agency, the seller is invariably kept in the dark about the progress of the sale as each agent is concerned that the other agents may benefit from any information given to you.
This tendency of agents keeping things to themselves is obviously very often to the seller’s disadvantage.
Exclusive Authority to Sell assures both agent and seller of full control, which is not possible in the case of open agency.
If you look at newspaper property supplements it is possible you will find the same property advertised by different agents, asking varying prices and giving a variety of reasons for the sale. Even though this is without the seller’s permission, the damage has been done!
Not only can this cause confusion and uncertainty, it can also create an incorrect perception in the minds of buyers that the sale is urgent and desperate, As a result, it more often than not attracts offers at nowhere near real market value.
In conclusion, it must be reiterated that, irrespective of the reason for the sale, the seller is entitled to the best possible price the market will pay and the buyer should pay market value.
It is not unusual to find people buying property through one agency – and selling through another, This is because the experienced seller knows that the agent who has achieved a bargain for them as a buyer is likely to work to their disadvantage as a seller.
The benefits of Exclusive Authority to Sell are so great that I always recommend sellers to work with a single agent in whom they have trust and confidence, even if it means the client goes to a rival agency.
It’s about commitment! The agent asking you for the Exclusive Authority to Sell your home is really promising and undertaking to give you 100% of their commitment to get you the best possible price the market will pay. What they are really asking is for you to give them 100% of your commitment in return!
Click on the below links to open to articles
Work with an estate agent
The question of the estate agent’s brokerage fee
First impressions count
Selling your home and buying another
Beware the dangers of over-pricing
Renovate or buy a new home: which is better?