Exclusive listings en vogue, now more than ever.

During the past few years, the exclusive listing method of building sales brokerage has become more and more popular in the Manhattan market. During the early 1980s, exclusive listings were rare and most real estate sale transactions took place in a market that was basically inefficient and was dominated by word-of-mouth transactions.

During the past few years, the popularity of the exclusive listing has grown, and today, in the market that ow firm covers, 73 percent of all available buildings are listed exclusively with a broker. There appears to be three main reasons why this is so: 1) An exclusive listing provides greater exposure for the property; 2) an exclusive listing provides a higher sales price through a more professional marketing approach; and 3) there is no cost or downside to the owner of hiring an exclusive agent.

Greater Exposure: When a broker is hired as an exclusive agent, that broker has the incentive to maximize the exposure that a property will get m the marketplace. The exclusive agent will tell all prospects that the property is available, not just the few that the broker has good relationships with. There is also a tremendous incentive for the exclusive broker to notify other broken that the property is available.

In a case where a property is listed on an open listing basis (meaning that many agents are notified that the property is available but no one is directly responsible for the marketing), there is a tremendous disincentive for the open listing broker to notify anyone that the property is available other than customers the agents have good relationships with. This is due to the fear that if they mention the listing to another broker, that broker will make a sale and the open listing broker will not make any commission. This is the single greatest reason the success of openly listed property has not come close to the success of the exclusively listed building sales.

This market phenomenon is also fueled by the fact that co-brokerage does occur quite frequently. Forty-one percent of all transactions in our sub-market are done on a co-brokerage basis, however, 56 percent of the exclusively listed properties are closed on a co-brokerage basis. This means that there are more actively participating parties to all transactions, which lead to numerous interested prospects, greater numbers of offers, and subsequently a better result in the marketing program.

The exclusive broker also has incentive to provide signs for the property, do extensive mailings of information to many different potential prospects, place ads in local papers, and prepare marketing packages, which are essential, particularly when dealing with the foreign segment of the market.

Higher Sales Price: Through creating a tremendous amount of exposure for a property, there will be more people actively marketing it, which leads to a greater number of offers and subsequently a higher sales price. In analyzing the transactions which occurred in our marketplace, the sales prices of the properties which were exclusively listed were, on average, 12 percent higher than the prices obtained for properties which were listed on an open listing basis.

There are several reasons why we believe this is the case. The exclusive agent has more incentive to provide an intense marketing program where all buyers and brokers are notified of the availability of the property. More professional marketing materials are prepared, which reflect accurate statistics about the property and present the property to the marketplace in the manner which it should be. The exclusive broker also has the motivation to obtain as many offers as possible, which leads to the highest price being paid. There is no reason for the exclusive broker to push the first offer that comes along, which is exactly what the open listing broker has incentive to do.

The exclusive agent has incentive to qualify each buyer and is directly accountable to the seller to provide detailed information on all of the prospects who are submitting offers and what their financial capabilities are. This more professional approach also provides greater efficiency, in that the seller is getting direct market feedback from one source who is coordinating the marketing efforts, rather than having to speak to 20 different brokers per day going through the same material over and over.

No Additional Cost: Another major benefit that the seller gets from having an exclusive agent is that they are getting a real estate professional who is in their corner fighting for the absolute highest price for them, while there is virtually no additional cost to having an agent. In our market, 94 percent of all transactions involve brokers. Therefore, it is likely that a seller will be paying a brokerage commission on their sale. If the seller is going to pay a commission anyway, why shouldn't the seller benefit from a professionally prepared marketing program and someone battling for them to get the absolute highest price?

An open listing broker tries to do one thing only, make the quickest deal at any price. There is no motivation to qualify a purchaser, or try to get that purchaser to the highest price they are prepared to pay. The exclusive broker also makes a commitment to the seller to actively market the property on a daily basis. The open listing broker is busy working on hundreds of listings and has no reason to pay particular attention to any one property.

Typically, in an exclusive listing arrangement, the exclusive broker pays for the marketing costs, which includes signs marketing packages, mailings, flyers, ads, and other things which will not be done by the open listing broker. Therefore, the owner is getting tremendous benefit without having to pay for it.

In summary, we believe that the reason that exclusive listings have grown in popularity during the past few years is that sellers are becoming more aware of the dynamics in the market and are realizing that maximum exposure for their property and a more professional marketing approach will lead to a much higher sales price with no additional cost to them. As long as the seller selects an agent who is capable and qualified, we feel the exclusive arrangement will lead to the most successful sales effort for the seller of any building.