When I first started this blog on a Saturday morning in September, 2005, I thought I needed to hurry up before every agent was blogging. Wouldn’t this be a great vehicle to educate consumers and demonstrate our expertise? Certainly, every agent will be doing it!
Instead, what blogging has exposed is that agents either have nothing to say, or transparency isn’t their friend. You rarely see much more than their recent successes – advertising of the properties they just listed or sold, with focus on how great the agent is.
Why doesn’t transparency catch on?
What do listing agents have to fear?
Exposing how sales are put together is like the proverbial sausage factory. Realtors don’t want you to know how the sausage is made.
Once an agent has a signed listing, how they procure a buyer is what makes the difference between a legitimate open-market sale, and an insider job. Even those agents who initially plan a legitimate open-market sale can get duped into an off-market quickie. How does that happen?
We operate in a desperate environment, and the most-desperate agents are making the market. Even the agents who AREN’T desperate, have to operate as if they ARE desperate, just to keep up. Unethical or illegal actions are commonplace, and with no enforcement whatsoever of the rules or laws, they continue unabated.
It’s always been like this, but after the fleecing of the banks during the short-sale/foreclosure era, we have become numb to the fraud perpetrated by realtors everywhere. Agents have brought their off-market fraud practices into the tight-inventory era, and expanded upon them.
Here are a few of the tricks being used by listing agents to deprive their own sellers of a top-dollar open-market sale. The most incredible part is that every agent implicates themselves by inputting these listings directly onto the MLS for all to see what happened:
- Coming Soons that never come. Instead, the listing agent finds a buyer from just placing a ‘Coming Soon’ sign in the front yard, and once procured, they input the listing directly into the pending section of the MLS.
- Sold Before Processing. We now see a few of these happen every day in North San Diego County’s coastal region. The listing agent takes advantage of the MLS loophole that states every listing to be inputted within 48 hours. It make take longer than that – but who will know or care when there is no enforcement of the rule – and office managers encourage the practice in order to keep both commissions in-house.
- The listing agent prevents showings the first few days on the market.
- The listing agent says house will be auctioned in three weeks, but then accepts an offer before then. Either auction the house, or don’t auction.
- The listing agent provides lousy MLS input – bad or no photos, etc.
- Instead of lowering the price publicly on a listing that has languished for months, the listing agent lowballs his seller with a buyer he has procured.
- The listing agent gives the appearance of an open-market sale, but then plugs in his own buyer at the last minute.
The worst part about this situation is that we accept it.
Other agents who see these tricks happening on the MLS are subconsciously thinking that it must be permissible, so they set out to do it themselves. After all, who wouldn’t want to make two commissions, instead of one? It is a self-perpetuating cycle that no one is talking about, let alone doing something.
We are racing towards the end of broker cooperation as we’ve known it.
By joining the Association of Realtors, every agent has agreed in writing to share their listings with other agents, and adhere to a strict Code of Ethics – to cooperate with each other. But the opposite is happening – it is cool to NOT share listings, and round-trip the commission instead.
The disrupters are taking full advantage of the opportunity, and capitalizing on the greed of agents by designing vehicles to perpetuate this vicious cycle of self-serving off-market sales, in spite of seller and buyer fiduciary duties.
Examples of how this has evolved are the listings inputted as ‘Sold Before Processing’, but then the listing agent DIDN’T round-trip the commission; instead, a different agent represented the buyer. They don’t recognize the harm being done to their own seller by not exposing the home to every buyer and agent. Yes, I’m sure there is an occasional instance that warrants an off-market sale, but not as many as we see today.
Because we see all of these listings on the MLS without explanation, it makes unsuspecting agents believe it’s all legit. Our buyers see listings come and go in five seconds, and they get more desperate:
Even the real estate maverick (who has been promising to StopZillow and save real estate for months), rolled out his answer last night. Incredulously, it is a mobile app designed to funnel all buyers directly to the listing agent within minutes (I skipped the first 20 minutes of backslapping):
This is my series of blog posts to address the situation, and my final installment is coming next.