Pros and Cons of an Exclusive Real Estate Listing

Most listings that are on the market for sale tend to be advertised on the MLS (Multiple Listing Service). This massive database of listings is the most common way for properties to be advertised, as it available to all real estate professionals who are members and are a part of a specific real estate board. It’s not uncommon for buyers to head straight to this online database when they’re in search of their next home.

But as popular as the MLS is, it’s not always used to list properties for sale. Some sellers choose to have their listings exclusively marketed without the use of the MLS. There are obviously some advantages of exclusive listings, or else sellers wouldn’t take this route. But there are also a certain number of drawbacks associated with exclusive listings that warrant consideration.

What is an Exclusive Listing?

An exclusive listing is a listing that is not published on the MLS. Instead, it is exclusively held by one specific real estate agent.

As such, the agent will have to use other outlets to market the property for sale, which usually includes advertising the listing to professionals within the agent’s network, such as other agents, clients, builders, and anyone else who may be interested in the property. For this reason, an exclusive listing is more of a private sale than a publically-marketed property.

Pros of Exclusive Listings

Also known as “pocket listings,” exclusive listings offer a few benefits to sellers.

Be More Selective

Sellers have the advantage of being much more selective of the people that go in and out of their homes, as well as the sale itself. Rather than allowing all sorts of tire-kickers in the home who have no intention of buying it, sellers can focus more on qualified buyers who are actually serious about buying. At the end of the day, sellers can save time and effort.

More Privacy

Many celebrities tend to have their properties exclusively listed when it’s time to sell. Exclusive listings offer a certain degree of privacy that is not possible when a home is publically listed on the MLS, which affords sellers with the benefit of minimizing the number of people – buyers or not – who will bombard a home with showings.

But celebrities aren’t the only homeowners who use exclusive listings to sell their homes. The average homeowner can list their homes exclusively in an effort to maintain some level of privacy when selling.

Maybe they don’t want their neighbors to know that they are moving. Perhaps they are going through a particularly tough time that’s causing them to move involuntarily, such as a divorce, death of a spouse, or loss of a job. Some sellers simply don’t want to have their full names and addresses published online. Whatever their reasons for wanting to remain private, an exclusive listing can help maintain some confidentiality.

Test Out the Market

Some sellers might not necessarily be highly motivated to sell their home just yet. Instead, maybe they want to test the waters first before they jump in the market with both feet. An exclusive listing can give sellers an opportunity to experiment a little with the market to see what type of interest their home can get. Based on what they are able to learn from the exclusive listing, they can make any necessary adjustments that would increase the odds of a successful sale.

It’s not recommended to experiment once your home is listed on the MLS. Your listing’s details should be as close to perfect as possible in order to avoid sabotaging the deal. For instance, experimenting with price is not recommended when your home is on the MLS. Once it’s up there, everyone will see how much you’ve listed for.

If you ever have to lower the price, everyone will see that too and could use that information to their advantage at the negotiating table. It’s not uncommon for buyers to low-ball sellers when they find out that a listing has already gone through a price reduction. Instead, exclusive listings allow sellers to test out the price without the whole world knowing about it, and without the repercussions of changing the price.

Cons of Exclusive Listings

Along with all the advantages of exclusive listings come a few drawbacks as well.

Limited Exposure

Perhaps the biggest disadvantage of an exclusive listing for sellers is the limited exposure they get as a result. Without the MLS, sellers are missing out on a ton of exposure that they otherwise would have on this massive database of listings.

All participating real estate agents who maintain their MLS memberships have access to the MLS and the listings on it and are therefore able to direct their buyer clients’ attention to this online source. Any buyers who are not connected to the listing agent’s network will simply be unaware of the listing, even though they may have otherwise been interested in the property.

Potential Skewing of Market Information

Many will argue that exclusive listings can affect the accuracy of home prices and even reduce competition because they are not part of the MLS. That’s why there is a certain amount of controversy surrounding exclusive listings, as some believe that they skew the market to some degree.

In addition, exclusive listings may impede on a seller’s ability to understand the true market value of their home. And the minimal number of sale records compared to those found on the MLS can get in the way of an accurate perception of the market for buyers.

In fact, exclusive listings are not encouraged in some centers across the country for this very reason.

Your Agent Will Be Representing Both Buyer and Seller

If a listing agent ends up finding a buyer through an exclusive listing agreement, they will likely end up representing both the buyer and seller, which can present a conflict of interest.

Agents who work exclusively with a buyer or a seller owe a fiduciary duty to their clients and look out for their best interests. But things can get pretty sticky in a case where an agent represents both the buyer and seller in a real estate transaction. If you prefer to have an agent only represent you, then an exclusive listing is probably not the route you’ll want to take.

The Bottom Line

Exclusive listings certainly have their place in the real estate market, especially in specific cases where sellers require a heightened amount of privacy and want to have a lot of control over the buyers who see their homes. But along with exclusive listings also come a set of potential drawbacks that warrant consideration. Be sure to speak with your real estate agent in depth if you are considering listing exclusively without the involvement if the MLS.