Exclusivity in real estate brokerage: what it gives the seller, and how to choose a broker

The content of exclusivity is not always clear or fully understood. The Real Estate Brokers Law tries to fill the gap by defining the term (section 9 of the law), but practice is dynamic and changing. The question is whether a seller should put their trust in a single broker or office, and whether there is an advantage in it. From the end to the beginning: in my view the answer is yes, but exclusivity does not come down to a terse clause in the law and a monotonous performance of set actions.

What exclusivity should give

Exclusivity should give the seller added value. A broker should act and represent the client faithfully, and set a higher bar than the one the law defines. The law defines exactly which actions a broker must perform to earn the right to a commission. These are basic, minimal marketing actions, and in practice they are not enough.

The myth: a "Catholic marriage"

Before getting to the root of the matter, an old myth needs to be dispelled, one that is often an obstacle to commitment. Many clients are put off by an exclusivity agreement because it looks to them like a "Catholic marriage". Is it? It is important to understand that, thanks to the law and the case law, the client is not bound to the broker forever. The exclusivity equation is simple: for a limited time the broker must be the effective cause. If the broker did not meet the cumulative criteria, the relationship can be released.

How to choose a broker

Once this obstacle is removed and the matter is clear, it is important to understand what is required. As a first step, choose someone who will clearly do the job faithfully: not someone who ticks a box next to every action only to have performed it, and not someone who sees your property as one more item in the database and expects statistics to work in their favour. Such a broker is passive.

In a competitive and saturated market there are many brokers who will represent the client faithfully, so it is worth choosing one with added value that sets them apart from the other colleagues. Added value can take several forms, and it is not always possible to point to a single unique quality. For example, a broker who is a stranger to the area of the property may do the job by every criterion and work with full energy, but does that broker have an advantage over the local one in availability and knowledge? A broker who knows all the other brokers and is on good terms with them, and who does not have to travel from outside the city, can be spontaneous and flexible in showing the property. It is worth checking and clarifying each broker's relative advantage over the others.

Professional knowledge

After finding a broker with these qualities, it is worth checking their knowledge of the important aspects: planning and building, reading plans, local regulations and so on. A broker's work does not end with showing the house ("this is the living room and here is the kitchen"), which the client can understand alone. Deals often blow up because of lack of knowledge, a wrong presentation of data or a professional misunderstanding of other important aspects. The broker is the first source of information: thanks to the broker the deal goes through, and because of the broker it can crash.

In addition, the broker links all the professionals, such as the architect, the lawyer and the authorities. The broker is the glue, the "first aid" in the field. A broker is not an architect or a lawyer, but must be knowledgeable about many subjects, such as building percentages, deviations from the permit and co-ownership agreements. These are issues that can give the client an answer and tip the preference from one property to another, and vice versa: lack of knowledge can lead to the opposite result.

Integrity and aligned expectations

Besides faithful activity, knowledge and added value, a broker should show inner integrity. Pleasing the client is important, but it is not everything. First and foremost the broker must be honest with themselves, and open the client's eyes to the value and quality of the house as the market sees it, not as the client sees it in their mind's eye. It is fine, and even desirable, to disagree with the client and guide them, because no seller was ever born who prices their home too low.

One can say much about clients' tendency to overvalue the property they own, and about their affection and sentimental bond with it. Accepting exclusivity at any price, in both senses of the words, can harm both the client and the broker. It is advisable to explain reality to the client with grace and a pleasant manner, and to align expectations about the price and the time needed to reach it. In luxury neighbourhoods selling a property is not something that happens overnight, particularly when the client wants to maximise the full potential. The client needs patience and, at the same time, should check the pulse and see whether the broker is acting and active.

Marketing beyond the sign and the website

At the end of the day the broker must bring the seller the buyer and reach all the sources, and for that the way of working is not relevant as long as the broker meets the task. A broker who put up a sign and advertised on Yad2 may be protected by law, but in practice will not necessarily reach the potential client. Actions such as exposing the property to other brokers and parties who can advance the sale, repeated reminders and preparing an information file can bring a better result than advertising on websites or similar marketing channels. It is important to understand that the same marketing channels do not suit every property: advertising an expensive rental on internet sites, for example, will not reach embassies.

Managing the negotiation

Suppose that, in good time, the buyer is found. The broker has completed only half of the job, because the negotiation stage begins. In exclusivity, and in general, it is worth choosing an experienced broker who knows how to negotiate. A marketing "cannon" is not necessarily a good negotiator, and vice versa. Some offices have a clear division between the marketer and the one who manages the negotiation.

The broker is the thread linking all the parties: the lawyers, the buyer, the seller and the broker representing the buyer. That takes patience, restraint, knowledge and experience to complete the delicate fabric. This may well be the first quality to look for in a broker, because the art of managing a negotiation is more important than finding the client.

No matter what the seller's profession and background are, it is right to leave the negotiation to a third party, the broker. More than once I have met a real estate lawyer who asked a colleague for help when the property was his own. He knows that a third party will manage the show better, being emotionally detached. The same goes for the broker: after choosing one, it is right to leave the conducting of the orchestra of all those involved to that broker.

Why it is worth it

There is no need to fear giving exclusivity to a broker who meets the important parameters, and the commission is negligible compared with the result. The advantages outweigh the disadvantages. Exclusivity gives the broker the quiet to act and market with full energy, unlike a property that sits in a database. Add rumours, a price exchange and other side effects of a property that is not managed by a single party.

One could say much more, but it is important to understand that exclusivity is not forever. Practice shows that many properties stay in exclusivity for long periods because the client understands its importance and advantage. And if we found the connection and the interaction, no less important, in a place where you feel safe and not exposed to manipulation, exclusivity has almost no disadvantages.

Hagai Oren, Oren Real Estate, Herzliya Pituach. For comments: +972-54-445-2120, hagai@oren-realestate.co.il