Everything Sellers Should Know About Exclusive Listings

Penelope Graham
by Penelope Graham September 26, 2016 / No Comments

In Canada’s housing hotspots—the Vancouver and Toronto real estate markets, for example—bidding wars are commonplace. Limited supply and high demand, especially for detached houses and townhomes, mean sellers can benefit from a number of very competitive offers.

But does it ever make sense to forgo a bidding war and use an exclusive listing to market your home? This tactic can be a way to generate early interest, but seller beware: They can also lead to fewer offers than a traditional bidding war, and even a lower selling price.

Here’s what sellers should know about exclusive listings:

What is an exclusive listing?

The traditional way to market a home for sale is to have it listed on the Multiple Listing Service (MLS) on Realtor.ca. This is usually handled by the listing agent, who’ll also work with a cooperating brokerage. There is a cost associated with using Realtor.ca, which is built into the commission paid to the agent by the seller. The benefit of using this resource is it exposes your listing to the entire market of interested buyers and potentially thousands of eyeballs.

An exclusive listing means your listing won’t appear on Realtor.ca right away. Rather, your agent will advertise your home only to a selected pool of buyers for a period of time before opening it up to the full market.

Why have an exclusive listing?

This is where things can get confusing for sellers. After all, this might be a move suggested by the person they trust most during their real estate transaction: Their agent. But an exclusive listing isn’t a good option for everyone.

Where an exclusive listing can come in handy is if you require confidentiality when selling your home, or if it’s very niche and will appeal only to specific buyers. For example, a celebrity may opt to keep their multi-million listing off MLS, or a home built for individuals with very specific lifestyle needs can be marketed directly to them.

You might get less for your home

The biggest risk when listing exclusively is shutting out potential buyers from making an offer on your home, meaning less competition. For those trying to sell Toronto or Vancouver real estate, skipping the bidding war could mean receiving an offer that’s potentially hundreds of thousands of dollars lower.

The numbers back it up: A recent poll from the Real Estate Council of Ontario (RECO) finds 57% of Toronto buyers would go beyond their top budget in a bidding war, with 38% willing to pay 10% to 20% more.

You could pay more on your mortgage

Exclusive listing or not, it’s unlikely your house will languish unsold in today’s hot market. But in slower conditions, missing out on potential buyers can lengthen the timeline of your sale. That means paying for utilities, upkeep, and ongoing mortgage payments, not to mention the hassle of keeping your home staged and in viewing shape.

For sellers who have already purchased a new home and need to port, refinance, or renew their mortgage, having a lingering listing can be a costly and stressful situation.

Why is my agent recommending an exclusive listing?

If exclusive listings tend to limit competition and offers for your home, why would your real estate agent ever recommend it? Here’s where things can get sneaky. In most cases, the commission from a home sale is split between the agents representing the buyer and the seller. In the case of an exclusive, however, the agent represents both parties. That means they’re double dipping on commissions if they successfully sell your home.

The bottom line

Commission-motivated agents may shut out potential offers from interested buyers outside the exclusive pool. While showing your home to a few special buyers first can generate some buzz, it’s important to ensure you’ll still be informed of such offers should they come in during the exclusive period.

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