May 5, 2022 in Real Estate in Costa Rica, Tips for Sellers, Selling Process

Open Listings Vs Exclusive Listings (And Why Realtors In Costa Rica Avoid Taking Open Listings)

The Southern Zone of Costa Rica is in a seller’s market due to a growing number of buyers searching for their dream home in the tropics. This has increased real estate seller confidence to value their properties at a much higher rate in 2022 than we realtors in Costa Rica have ever seen before in this part of the country. As a result, some sellers are wondering if it is in their better interest to do an open listing with multiple agents. But we are here to explain why that is generally not the case.

As an office, we value our high level of service and the numerous efforts that we put into selling homes. When our Osa Tropical Properties agents take an exclusive listing, we are committing our full effort to market your property. For us, this means filming drone videos, property walkthrough videos, high-quality photographs, a well-written description of your property, sharing your property listing with the 80+ agents in the area, and we have a team of in-house experts in global marketing and knowledge of real estate in Costa Ballena. All agents on our OTP team have at their disposal the full resources and communal knowledge of our office and collectively we have over 50 years of experience in this market.

Open vs Exclusive Listings in Costa Rica

According to the website, Investopedia:
“In an open listing, the seller retains the right to employ numerous brokers as agents. The seller is obligated to pay a commission only to the broker who successfully produces a ready, willing, and able buyer. If the seller finds a buyer without the help of any of the brokers, then the seller is not obligated to pay a commission to anyone. 

“An exclusive listing works differently. In an exclusive listing, only one broker is specifically authorized to act as the exclusive agent of the seller. That means one broker has the sole right to market, show, and sell the property; other brokers are excluded from trying to sell the property while the agreement is active.”

When our office takes on a new exclusive listing, we create professional marketing content that we share with other agencies locally, around Costa Rica, and globally via digital folders so that other offices can post our listings on their website. We do the same for listings from other offices. We provide our sellers with regular listing progress reports, feedback from showings, and excellent negotiation skills on your behalf, among many other traits.

The implications of the term ‘exclusive’ make it seem that realtors are keeping their property for sale exclusive to their own client base. This is not at all the case because it would be very limiting to us. When a realtor in Costa Rica takes an exclusive listing, we share all of the marketing material that we create with the 80+ other realtors in the area. By all of us doing so, we are in a sense creating an MLS-like scenario where we have the freedom to encourage other agents to show our exclusive listings to their clients.

Benefits To Sellers Signing An Exclusive Listing Agreement

Despite all the work that we do to sell properties, we do offer our exclusive sellers an incentive to bring a buyer for their property by paying a referral fee, which we pay to anyone who brings us a successful buyer. This can work out to be a sizable portion of our commission. But we will not discount the entirety of the buyer’s side of our commission if a property seller we are working with brings us a buyer because of the amount of work to complete the transaction on both the seller’s and the buyer’s sides. The work required to complete a real estate transaction is a full-time job that may seem simple and straightforward to the uninitiated but is actually very laborious and requires experience and expertise in the field. It is much more than signing papers with a lawyer and transferring money.

Having one dedicated agent representing your property for sale in Costa Rica also provides you with someone accountable for the safety of your belongings. If you opt to have an open listing, you may be opening your door to countless agents with no one person who is vetting those who come through your door and observing them carefully. This goes doubly for sellers who are not local during the sale of their home who need to feel that their property is secure while they are away.

In our role as realtors in Costa Rica, we wear a variety of hats. We sometimes act as property managers, communicating with our sellers about the state of their property if they are out of the country (sometimes we visit properties more often than their property managers). We occasionally help absentee listers with things that need attention that will help us sell the property. We have checked on construction in progress and we help people set up or close accounts if they are unable. Our goal is to help our dedicated exclusive clients make their real estate transactions as fluid as possible and we will go out of our way to facilitate what needs to happen to best present your property.

We suggest a one-year contract for our exclusive listings as a reasonable period of time to complete the sale of a listing in Costa Rica (although most properties in Costa Ballena are sold in far less time). If for some reason our clients find our service unsatisfactory in that one year period, we generally will not hold this contract to bear as we do not want to have disappointed clients.

Realtors Avoid Open Listings

The reason why realtors in Costa Rica prefer not to take an open listing is that we put so much work into selling our exclusive listings that it is not fair to share our effort with sellers who do not value our service enough to essentially “hire” us by signing an exclusive contract. 

To have an open listing, sellers must speak with the different realtors they want representing their property. The seller will either have to create their own property photos, description, and any other type of marketing material or hope that each of the realtors they speak to will come and take their own. If the realtors do take their own, they will be very unlikely to share their content with any other realtors.

Sellers who choose to have an open listing must understand that the agents they speak to will do their best to market and show their property without a formal sales agreement. But if we are limited in time (as we can be in this busy market), we will focus our efforts on the listings that guarantee us a return. There is no spite in this – it is a matter of principle that we are more dedicated to those who commit to paying us for our efforts.

We spend a lot of time and money preparing listings for the sellers we work with and marketing them around the world. It is challenging to share our proprietary content (photos, videos, written content) with other realtors if we do not have an exclusive agreement signed because any other realtor can use our content and cut out the original agent who informed them of the listing by coming to a deal directly with the seller. 

What makes real estate different in Costa Rica than the more traditional residential real estate markets around the world is how many different types of real estate we represent and the multitude of locations that we drive to in order to show buyers their different options based on their criteria (the diversity can sometimes be vast!) They may have a budget and an idea of the size of home that they want, but do they want high elevation or low? Do they want to be in Dominical, Uvita, Ojochal, or Chontales? All of these are within a 40-minute drive of each other but all are very different and need to be experienced more than described.

Most of the buyers we work with need to see many properties in person before they are confident in making a decision about the type of property in Costa Rica that is right for them. This equates to frequent wear and tear on our vehicles and lots of miles. Buyers do not pay for this service and we spend countless hours answering their questions and educating them on the real estate process. Real estate sellers are benefiting from this service because we cover all of the outlying costs of working with buyers, and attracting them to our office in the first place.

For us to invest so much time, effort, and money into marketing a listing, and showing it to numerous buyers, we want to know that we will be paid after the sale of the property. Without an exclusive listing, this is not guaranteed and can be a big loss for us.

Our Verdict On Open Listings

Open listings are good for an agent if the listing is for a niche market or the location of the listing is outside the agent’s normal reach and client base. We want to give our top performance to exclusive listings and a distant listing will miss out on a lot. But in every other scenario, it is in both the seller’s and the realtor’s best interests to sign an exclusive listing if the professional nature of their relationship seems mutually beneficial.

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