Why Exclusive Listings Matter
November 22, 2022
You’ve probably become accustomed to seeing “Exclusive! Coming Soon to the MLS!” on For Sale signs, but that will be ending, come January.
On a property, the term exclusive simply means the property is for sale with a specific agent and not listed on the Multiple Listing Service (MLS).
The reason you won’t see that term any more is that as of January 2023, the Canadian Real Estate Association (CREA) is changing the rules for exclusive listings and limiting the use of exclusive listings to almost nothing. The reason this matters is that CREA is restricting sellers’ right to list their home the way they want to.
The vast majority of properties for sale in Canada are listed on the MLS, which anybody can access through realtor.ca. The benefits of being publicly listed is that all realtors can see a home is for sale, which leads to more showings and potentially, a higher sale price.
However, in some circumstances, sellers opt to sell privately, or sell exclusively through one realtor and their brokerage.
Nobody really knows how many homes sell when they’re listed exclusively because when a home sells privately, the data isn’t easily accessible. CREA is moving to eliminate this option because it is trying to control the data.
One reason somebody would want to consider listing exclusively is that they’re on the fence about selling. They may sign a listing agreement with me so that if I find a serious buyer, I can show their home to that buyer.
The contract is the same document we use when listing a property on the MLS, only you initial ‘Exclusive’ rather than MLS.
It allows me to list your property for a minimum of 24 hours and lets me show your home to a potential buyer. If I bring you an offer that’s negotiated and accepted, you agree to pay me a certain amount of money which could be a dollar amount or a percentage, plus HST, which is often less than paying a full 5% commission in a traditional sale.
Moving forward, sellers will have to list their homes on the MLS, which requires a minimum agreement of 60 days. You can terminate the agreement at any time, but then you’re forever in the system as having tried to sell your house for 24 hours.
The benefits of having an exclusive listing:
Buyers who come through an exclusive listing tend to be more focussed.
Although preparing a home for going to market is always advised, a seller may not have to go through the process of staging if the exclusive listing is only required to show one buyer through the property.
Another instance when an exclusive listing can work is when a seller wants their property on the market, but the timing may be off. Let’s say they want to list it at the beginning of December, which even during a boom time, is slower. An agent may list the home exclusively for a few weeks, marketing to their network, their brokerage and through their own social media, before putting it on the MLS when the market is busier. This way, the home appears to be a new listing and doesn’t appear as having languished on the market for weeks, which can raise suspicions.
Sometimes a buyer is looking for a specific property or a home in a particular neighbourhood. A realtor can go door to door or send a letter, saying they have a buyer who’s looking for that kind of property or location.
The agent can ask for a 24 hour listing, show the buyer the home and the seller agrees to pay the realtor’s brokerage a commission. The home never hits MLS, there are no showings, no staging and no worrying about a property being on the market for weeks on end.
Privacy is also an issue. I think your sale price should be private. If I were to sell exclusively, I’m also doing it because I don’t want people to know what the final sale price of my property is, and I don’t want somebody to know how much money I got.
When a home is listed on the MLS, anybody can register with HouseSigma, or similar sites, to see how much properties sold for.
If someone really wants to know how much a home listed exclusively sold for, it’s on the land registry. This information is only available to registrants and even then, I’d have look up a specific property to see if it sold.
Over the years, I’ve assisted many sellers using exclusive listings where the seller was approached by a realtor or buyer directly and the seller requires assistance with the paperwork. In these cases a nominal commission is negotiated. Why should that sale go on the public system? The property wasn’t marketed, so it’s not a true indication of value as it didn’t get exposed to a large pool of buyers.
As with anything, there are positives and negatives when it comes to exclusive sales, but I think that sellers should have the option to list their homes the way they want to.
If you have any questions about exclusive sales, or just want to talk real estate, please get in touch!