Nowadays all listing agreements - even open - contain holdover clauses with decent timeframes so that sellers can't get away with circumventing commission due to buyers the agent found.
So why is it that most agents still use the holdover argument to evade settling for anything other than exclusive right to sell?
When I used to sell way back in the day when i wasn't yet an agent, despite the 'Principals Only' warning boldly plastered all over my FSBO listings, agents nevertheless lined up at my doors with the usual pitch even when notified in writing to cease communication, still wanting ERTS, throwing fits and all, sometimes even disrupting my open houses under the guise of bringing 'buyers ready to sign' that were 'on their way' yet never showed.
Granted over those years, there were 1 or 2 out of dozens upon dozens agents who were up for the challenge to compete with my own offers, but most others were just too greedy or whatever and just would reiterate the holdover clause like parrots, pretending to not understand holdover clause is why exclusive agency without right to sell remains a viable compromise and formidable challenge to truly measure up to.
have you as investors (and/or as agents) ever had similar gripes with stubborn/aggressive agents who yet weren't up for the challenge competing with the owner(s) themselves to find the best offer that successfully closes?
or do you yourself an agent either take only ERTS or lose the listing altogether, no matter how stern the seller?
Great question. I can't speak for everyone, just myself. I only list properties ERTS. For us, it's s business decision. I know that we can sell properties. Our sales plans work, and our sellers agree.
I also think that we are just like any other sub. As an investor, you hire a good agent just like you hire a good plumber. Do you see many plumbers working the same job as other plumbers or the owner where only the one that completes a specific piece getting paid?
For an investor, their time is generally better spent working on their business than in it.
"Do you see many plumbers working the same job as other plumbers or the owner where only the one that completes a specific piece getting paid?"
Exclusive Agency restricts the 'client' (seller) to working with only one 'plumber' (agent) exclusively already, without the need for ERTS.
Obviously, someone seeks out a plumber for a job because they apparently cannot or will not do it themself. The plumber likely did not go door to door asking homeowners what DIY projects they were working on, and insist do the job for them instead.
However, when a seasoned FSBO investor is selling a property on MSL on their own and willing to work with other agents, I don't see why the vast majority of agents play games as described above like the 'imaginary buyer ready to sign on the way, "I just need you to sign my ERTS in the mean time"' and so on.
Perhaps my recent stance on this is because i'm both an agent and investor now and I'm trying to see sales from both angles; ie in one recent deal I was involved in, a dedicated sales team employed by a prominent builder were constantly bombarded by agents contacting them wanting ERTS wasting their time and causing distractions at the sales team's open houses and such.
I've seen too many cases where a FSBO finally gave into a ERTS only for the property to sit on the market longer than it 'may' have if it was just exclusive agency or open agency.
I always push for ERTS too but once it's an owner advertising on MLS and claiming to have strong offers already, I dont see why anyone in their right mind would just hand over the listing without any competition agains the work they've already put into marketing and leads/offers.
Ie once a FSBO breaks down and takes an ERTS what if the the exclusive agent with right to sell after weeks and weeks doesn't bring any better offer and then the FSBO decides to go with an offer made right before the ERTS, the agent is still likely to claim they spent so much on marketing and such and so now want at least part of the commission per later agreement, when in reality the ERTS agent did not perform at all - just wasted his clients time- and the FSBO performed better without agent and now has to deal with possibly being held liable for agent's marketing expenses etc when agent delivered nothin but crap.
I see your point. If you have an offer on the table, take it - especially when you are a seasoned investor. The problem is 80% of the agents don't have the education or market knowledge to provide the value. Once a property hits the MLS, Realtors are not supposed to solicit the listing. It's against the Realtor Code of Ethics and they can even lose access to the MLS. Even if the property is a limited service or entry only, it still counts.
The bait and switch drives me crazy as well. "I have a buyer ready..." 9 times out of 10 there is no buyer. IMO, if are honest and provide a valuable service then you will have work. If you bait and switch, use sketchy tactics, or try to lock someone in to agreement that is not mutually beneficial, then you shouldn't be in business to begin with.
Your last example, where the FSBO had an offer then decided to go ERTS with the agent not producing sounds flawed. Either the seller should have taken the offer to begin with and move on, or the property is not marketed correctly, or the agent took an overpriced listing and should have told you to take the offer you had. The agents should be honest up front. If you have a good offer, then take it. On the other hand, if the FSBO agrees to employ the agent, he/she should stick to the agreement. His/her choices are to either take the first offer, continue to market the property on his/her own, or hire the agent.
I sell commercial real estate. I want the relationship with my clients. They are not getting my time unless they commit to me.
It's every right for an investor to contact umpteen brokers/agents and say if you bring me something I will compensate you. It's also very easy to try to screw the broker/agent over and the seller say they generated the buyer to get out of paying a commission.
It's my business and I can dictate what clients I choose to work with. I have earned that right over the years. I am an investor myself so I see all angles.
My best clients get to look at the deals first and decide if they want them or not. On listing I would only do ERTS. You really need an inexperienced agent with little to no business wanting to go after anything else. Some experienced investors do not want brokers/agents. They want gophers to do their bidding on the cheap. People that are highly successful do not need or want to do such things.
If there is a property that I know is a great fit for my regular buyers I will take a look at it, report my findings and make write offer for them.
Other than that situation exclusive right to sell is the only way I will take a listing.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!