The selling of listings prior to MLS input has happened since the beginning, but in the era of inventory desperation, we’re now seeing companies openly advertising ‘previews’ of their listings before they put them on the MLS. Before long, the MLS will just become the market of last resort, much like Loopnet is for the commercial brokers.
Home sellers expect and deserve open-market exposure, but nobody in the business wants to give up the hope of double-ending a commission, or making a quick deal and moving on to the next. Many of these off-market deals involve an outside buyer’s agent, which is really mind-boggling that listing agents are so lazy that they are willing to compromise their fiduciary duty to their own seller just to make a quick buck.
Frankly, this issue is only going to get worse. Redfin (dozens of times) and other disrupters are doing it too, and we are heading towards having only one agent per sale – which sounds efficient, but will sellers get full exposure?
Here’s a solution for those agents who insist on doing it, and a way to ease into a more-ethical era (hopefully):
DON’T PUT THEM IN THE MLS – EVER.
For agents who say that they have to input their listings per the rules, give me a break. You already broke all the other rules, don’t go holy roller on me now.
Here are the benefits of not inputting your off-market sales onto the MLS:
- Other agents won’t have to explain to their waiting buyers why they didn’t get a chance to make an offer.
- Other agents won’t think you’re a sleazebag.
- Other agents won’t be encouraged to do it too.
- You won’t leave a trail of evidence for the district attorney.
- Help preserve the MLS and our business.
How bad is it? An agent who sells 100+ homes per year recently told me that half of their listings sell before MLS-input!
Did you have special circumstances that required an off-market sale, and you insist on MLS input? No problem – mention the special circumstances in the remarks so others don’t jump to their own conclusions. But special circumstances are rare – most common and unsuspecting residential home sellers deserve open-market exposure.
We’d like to believe that realtors are ethical – heck, we have a Code of Ethics! But when tempted to make a quick and sexy off-market deal, most agents can’t resist, even if it’s not in their sellers’ best interest. I’m convinced that the vast majority of agents don’t even know the difference.
For commercial, are dual agency and pocket listings the default way to buy and sell meaning relationships are the controlling factor as far as whether you get a good deal as a buyer or seller?
Can you at this time be a successful investor in commercial by buying or selling commercial in an open market fashion without relationships being the controlling factor? It would be nice if open market was the default but relationships are the way I have always seen it done and I am hoping you will tell me I am missing something.
I wonder if it got this way because we as humans and (especially if a person believes that she or he is a savvy investor) like to think we are smarter than the next guy and believe we know that special someone who can get us buy great off market deal or when selling get us special access to that extra motivated pool of buyers. Maybe investors feel that all of the above and their smarts are enough to overcome any downsides to dual agency.
Great post Jim, and you are 100% correct. It is truly a problem and makes the game less trustworthy.
It also discourages newbie buyers who see the “abnormal” sale and hold out for that deal for themselves, which is never gonna happen for them.
Can you at this time be a successful investor in commercial by buying or selling commercial in an open market fashion without relationships being the controlling factor? It would be nice if open market was the default but relationships are the way I have always seen it done and I am hoping you will tell me I am missing something.
I’m sure there are occasional deals for those without an insider relationship, and if you would have bought anything between 2009-2013 it looks like a deal now.
The big difference between commercial and residential agents is that we have a structured MLS, and EVERY PARTICIPANT HAS SIGNED AN AGREEMENT to share their listings with their fellow agents via the MLS. It is a fantastic feature that benefits buyers and sellers.