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An open listing an an open invitation from a home seller for any real estate agents to find a buyer to purchase the property.
This is in contrast to exclusivity contracts that selling agents are adamant that homeowners sign in order to secure a commission as long as the house is sold within the time period in which such contracts are still active.
Open listings enable a seller to work with as many agents as he wants and the one who closes the transaction by bringing a buyer to the table will receive the commissions.
This can be attractive to a broker as he would not have to split the commissions due to co-brokering fees. He alone would receive the commissions.
However, home sellers often realizes this and offers a lesser commission. But a broker would still be better off when a “standard” commission is less that what such a seller is offering due it it being halved when shared with another agent.
Agents understandably would prefer exclusive contracts to represent home sellers. This ensures that they get paid one way or another.
Moreover, there’s always a risk that a seller would not pay what is due after closing since there are no contracts of service signed between him and the agent.
The chief reason why home sellers would prefer open listings is to avoid the risk of hiring an exclusive agent who lazes around and gets nothing done.
When this happens, being locked into the exclusive contract can be frustrating.
A lot of seller create open listings after failing to sell their house via FSBO.