When selling real estate, it is common to enter into a listing agreement with a real estate company. These agreements are categorized into three types: Open Listing, Exclusive Agency Listing, and Exclusive Right-to-Sell Listing. It is important to consider which type of contract best suits the situation.
This article will provide a detailed introduction to the three types of listing agreements, serving as a reference when choosing the type of agreement. It aims to help understand the characteristics of each agreement and prepare for the sale of real estate.
What is a listing agreement?
First, let’s outline what listing agreements are and the different types available.
A Contract for Selling or Purchasing Real Estate
A listing agreement is a contract between a client who wishes to sell or purchase real estate and a real estate company (intermediary). After signing the listing agreement, the real estate company will act on behalf of the client to conduct sales or purchase negotiations for the property.
Specifically, the real estate company will handle the promotion of the property, property tours, price negotiations, and the signing of the sales contract, ensuring that the client’s property transaction proceeds smoothly. Through the listing agreement, the client can conduct real estate transactions with peace of mind, supported by professional assistance.
Types of Listing Agreements
There are three types of listing agreements: Open Listing, Exclusive Agency Listing, and Exclusive Right-to-Sell Listing.
The features of each agreement are summarized in the table below.
The following sections will delve into the detailed features of each contract, so be sure to read on!
Open Listing
Here, we will explain Open Listings. Let’s take a look at what an Open Listing is and what it’s all about.
Overview of Open Listings
An Open Listing is a type of listing agreement that allows a client to contract with multiple real estate companies simultaneously.
Since there is no exclusive contract with just one company, The client has the freedom to sell the property with considerable flexibility. Even if the client finds a buyer independently, it is not a breach of contract. In most cases, the client only needs to pay the commission to the real estate company that assists in completing the property transaction.
However, since there is no obligation to report contract activities, it can be difficult to track the status of the real estate companies’ efforts.
Additionally, this type of contract does not require real estate companies to register property information on the ‘REINS system’ (a network platform system designated by the Ministry of Land, Infrastructure, Transport and Tourism of Japan). Therefore, compared to other types of brokerage contracts, it is more difficult to disseminate property information nationwide, which may result in a longer time to find a buyer.
Advantages of Open Listings
The advantage of an Open Listing is that the client can conclude a contract with multiple real estate companies at the same time. This increases the likelihood that property sales will be widespread, providing more opportunities to reach potential buyers.
Another advantage is that it is less binding than other types of listing agreements, allowing the client the flexibility to adjust the sale strategy according to the situation.
Exclusive Agency Listing
Next, this article will introduce the overview and advantages of the Exclusive Agency Listing.
Overview of the Exclusive Agency Listing
Under this type of contract, the client can only commission one real estate company, but the client can still find a buyer independently. Additionally, the Exclusive Agency Listing requires the real estate company to report the property’s sales status to the client every 14 days, making it easier for the client to track the progress of the sales activities.
Furthermore, the Exclusive Agency Listing requires the real estate company to register the property information with the REINS system. This allows the property information to be disseminated nationwide through the online platform, increasing the property’s exposure. Consequently, compared to an Open Listing, this type of agreement makes it easier to find a buyer.
Advantages of Exclusive Agency Listings
The biggest advantage of an Exclusive Agency Listing is that the client cannot sign contracts with more than one real estate company, prompting the real estate company to adopt a more proactive approach to selling the property. As a result, the client can expect the property to be sold more quickly. Additionally, the client can work more closely with the real estate company during price negotiations and contract procedures.
Moreover, the real estate company is obligated to regularly report the property’s sales status to the client, allowing the client to have a detailed understanding of the sales progress and proceed with the transaction with greater peace of mind.
Exclusive Right-to-Sell Listing
Finally, this article will introduce the overview and advantages of the Exclusive Right-to-Sell Listing.
Overview of the Exclusive Right-to-Sell Listing
An Exclusive Right-to-Sell Listing is a type of contract where all real estate sales activities are entrusted to a single real estate company.
This type of listing requires the real estate company to report the sales status to the client every 7 days and to register the property information with the REINS system. However, this contract prohibits the client from commissioning other real estate companies for the sale and from finding a buyer independently. Therefore, compared to the other two types of contracts, clients have less flexibility in disposing of the property.
Even if the client’s relatives or friends want to purchase the property, the client cannot bypass the real estate company and sign a sales contract independently.
Advantages of an Exclusive Right-to-Sell Listing
The biggest advantage of an Exclusive Right-to-Sell Listing is that the real estate company exclusively handles all sales activities for the property. This means the client can expect proactive marketing efforts and a quicker sale.
For the real estate company, such contracts are given the highest priority, leading to a full commitment to the sales activities with the aim of selling the property in a short period. Additionally, the exclusivity of the sales process facilitates smoother price negotiations and contract procedures.
Furthermore, with the obligation to report the sales status to the client every 7 days, the client can closely monitor the progress of the sales activities and proceed with the transaction with greater peace of mind.
Summary
Signing a listing agreement is one of the ways to facilitate real estate transactions. An Open Listing offers high flexibility, allowing the client to sign contracts with multiple real estate companies. On the other hand, Exclusive Agency Listings and Exclusive Right-to-Sell Listings focus on entrusting the sale to a single real estate company, with the expectation of a quicker sale.
Choosing the most suitable listing agreement based on the purpose and circumstances of the property sale is crucial. Thoroughly understanding the characteristics of each type of agreement helps in selecting the one that best meets the needs, achieving the ideal real estate sales goals.
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