Exclusivity vs Non-Exclusivity: What is better to sell or rent?
Exclusivity vs Non-Exclusivity
When putting your apartment up for sale or for rent, you have surely thought about the best way to manage your apartment and potential clients. Basically in the Spanish real estate market there are two options:
- You manage it as an individual or
- You hire a trusted real estate agency.
In this article we are not going to talk about the private administration, if not, we will talk about the agencies and the exclusive treatment and without it.
Each option has its advantages and disadvantages. However, depending on your situation, one may work for you more than the other.
Let’s start with the first step and answer these questions: Which agency is the best option? Which one has the best reviews or web presence? And above all, which agency do I trust the most?
To answer these questions, you will need to do some research to find out which one best suits your needs. However, you can always ask your friends or family if they have worked with a real estate agency, and especially if they liked the service they received to refer one to you.
If you cannot get a recommendation with which you feel 100% satisfied, you can always see the options and compare their services, web presence, quality of photographic and video records, humane treatment of their agents and the area in which they operate .
Once you have collected several options, at Geräh Real Estate Partners we recommend you to interview the agencies you have in mind. We always recommend doing between 2 to 4 interviews with agencies to really know which one you feel most comfortable with.
In these interviews, the issue of exclusivity and non-exclusivity will surely come up, especially if you liked two agencies a lot and you think twice: Do I choose a single agency with an exclusive agency or hire both without exclusive agency to run my apartment?
In this article we will help you with these questions and we will explain the pros and cons of each one.
If you are an individual, I am sure that in the course of your history as an owner, many agencies have called you to try to help you with the sale or rental of your apartment. In these conversations they have surely offered you an exclusive to help you with the management of your property. But, what are the conditions of an exclusive? For how long? What is the profit margin between exclusive and non-exclusive?
To answer these questions, it is important to explain and break down what an exclusive is, what can and cannot be done.
The main thing about an exclusive is that the company you hire will be the only one in charge of running the apartment, not even the owner himself. Why is this?
When managing an apartment or villa exclusively, both the agency and the agent invest resources that will only return at the time of sale or rental. If they are true professional agencies, they will invest in professional photography and video, marketing campaigns, time and transportation, and above all the effort to give priority to your apartment in order to sell it as well as possible.
By working without exclusivity, the agency will not be able to invest in all these resources that will facilitate the transaction. Simply due to the fact that the owner has 3 or 4 agencies responsible for the apartment. Agencies cannot take the risk of investing so much in a transaction that it is likely that the agency will not close the deal. In this way, an exclusive that allows you is that the agency can work in the best possible way as the professionals know and dedicate the necessary time and resources to get the most out of the operation.
Once, in a recruitment call, they intuited that if they signed the exclusivity contract, the agency would not move as quickly as they would with a non-exclusive one. For the simple fact of competition.
However, that boy was wrong. An exclusivity translates into special treatment for that apartment and that owner. It means a bond of trust where we will try to do the best possible business for that client who trusted us.
Another benefit of working exclusively is the fact that there is a possibility that the agency fees will be lower when working exclusively. The reason for this is that if you work without exclusivity, there is more risk for the agency, so the fees are a little higher.
There is a conception that when working without exclusive and working with two or more agencies. There is a possibility that visits will double or triple. Although this has a certain real approach, it would not be the best option for what you need. Sometimes we think that more is better. However, at the office we believe that quality trumps quantity.
Without exclusivity, the agencies will fight to see who manages to close the floor as quickly as possible and sometimes this hurts us. The first interest is not always the best interest.
Let’s see an example in the case of rent:
For the peace of mind of the owner, it is always sought that the tenant is a solvent, educated and professional person. That is why we exclusively invest many resources in the economic solvency studies of the interested parties and we evaluate which is the best option.
Finally, it should be noted that one of the negative parts of signing an exclusivity contract is that you will not be able as an individual to take advantage of a lead and close the floor. One of the clauses of the exclusive contracts indicates that if you close the transaction through a means other than the agency, the fees will still have to be paid. Regardless of whether you got the buyer. What is possible is to negotiate with the company in advance that these fees are even reduced by half for these cases.
Cancel an exclusive contract?
It is very difficult to cancel an exclusive contract without a major reason. The reasons why the contract could be canceled are:
- Some of the co-owners did not sign the commission.
- A weighty reason like a job loss.
- The contract is badly written.
- There is an abusive clause or crossing the illegality.
Many times they will have called you and when mentioning exclusivity you will almost immediately say no. Not because the service is bad, simply because there is a natural mistrust. For this reason, at Geräh Real Estate Partners we always recommend meeting the potential agent in person. The conversation, their knowledge of the area and the market, their availability and above all your intuition to know which agent to trust with your property will be key aspects for your future operation.
In the world real estate market, there are few markets that accept non-exclusive assignments. The United States is being a pioneer in this, there are practically no companies that work without exclusivity. However, Spain is a country that still has this business model, and it is certainly still being used.
At Geräh Real Estate Partners we believe that in the rental market non-exclusive assignments always affect performance due to the simple fact that the company that rents the apartment may not care about the tenant profile, if not, they just close the deal.
One of the few benefits of working without an exclusive is that you, as an individual, can look for a tenant without any type of limitation. So more doors could be opened for you. But be careful, you will have to be a great filterer to avoid tenants who may give you non-payment problems in the future . But at the same time, this advantage ceases to be if you negotiate with your company that you can also look for a tenant and that if you succeed, the company that is taking care of it exclusively charges half of its fees. And just like that you will be calm that professionals support the process, verify the solvency and more. A win-win example.
Another of the biggest disadvantages of this type of commission is that the agencies cannot afford to act with 100% of their resources, since if any other agency sells the apartment or rents it, all this investment will be wasted and will become a loss.
Remember that exclusivity is a very big advantage if you get your trusted agency. For the simple fact that they will always be there for you, when the tenant’s contract ends and another search is needed, a purchase or sale of a property. Long-term relationships are the foundation of our work and we always think of a lifetime relationship when dealing with clients, not just a transaction.