From the time of big hair, pagers, and carbon copies, comes this antiquated real estate practice.
Why are we seeing a resurgence in a real estate practice that makes so little sense to the selling consumer's interest? Yes, the number of homes for sale has remained stubbornly low. This is to the benefit of the seller, clearly. Low inventory, steady buyer demand equals increased sales prices.
It's Econ 101, in practice!
So why would a seller knowingly restrict the number of potential buyers for their home? I've yet to run into a seller that doesn't want as high a sales price as possible for their home. Yet, by allowing their agent to list their home as an exclusive listing, the seller is limiting their home's sales price by the number of potential buyers that their agent is working with...
How the Seller's Market Should Work in Favor of the Seller
A couple years ago, I listed a property at a price that both the sellers and I felt was pushing the appraisal line, but also fair to the market. We were mostly comfortable that if a full priced offer came in, the appraiser would not hesitate too hard in agreeing with the sales price.
The Sunday open house saw 160 people come through the door and 17 offers to review Monday night with the seller. We settled on, and closed, an offer that was 12% over our list price. Because of the competition for this home, the winning offer also removed the appraisal and inspection contingencies.
If this had been an exclusive listing, chances are good that the end sales price would not have been over list price, nor have terms as favorable to my client, the seller. The market spoke loud and clear about this home, in the market climate, at that time.
Again, WHY would a listing agent knowingly recommend the seller leave money on the table? In my opinion, that's exactly what exclusive listings do. The primary use of an exclusive listing appears to be to benefit the listing agent/brokerage. NOT the seller's best interests...