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.
It’s been an old wives tale that listing agents can’t disclose to a buyer’s agent the price and terms of competing offers. I found this at the N.A.R. website:
Real estate brokers may, unless prohibited by law or regulation, “shop” offers. Therefore, REALTORS® assisting purchasers in formulating purchase offers should advise those purchasers it is possible that the existence, terms, and conditions of any offer they make may be disclosed to other purchasers by sellers or by sellers’ representatives except where such disclosure is prohibited by law or regulation.
Competing buyers are more likely to respond favorably if you give them a number to shoot at. Sharing the price and terms of other offers is a way to create a slow-motion auction effect, which benefits both sides. Buyers gain some transparency, and sellers get top dollar.
This is the fourth installment of my essay on the future of real estate sales. I’ll send this along to Brad Inman, who is gathering thoughts for a leadership conference at the end of March, so they have my perspective from the street.
In summary:
The unconscious desperation among agents is ripping apart the formal agreement between brokers to share listings. The environment is going the way of commercial brokers, where exposing listings to other agents is a last resort.
We see it happening – there is the occasional article – but without vigorous intervention by realtors themselves, the MLS will slowly disintegrate and be picked apart by outsiders.
Sadly, the sharing of listings is what is best for sellers, buyers, AND realtors, but the greed and desperation among agents gets in the way.
What Can Be Done? What Are The Choices?
Individual agents can adopt a full-transparency program, starting with publicly describing the specific services they offer, and their commission rates. If consumers took the time to educate themselves about the differences between agents, at least they would make better decisions than they do now. It’s unlikely that this will happen, because agents are lazy and won’t bother, unless forced to do so.
We can hope that N.A.R., C.A.R., big brokerages and other industry titans will address this specific problem, and implement changes to save the MLS and broker cooperation out of a commitment of doing what’s best for consumers. Probably the least likely of these five to actually happen.
We can have big leadership conferences where outsiders will speculate how the disrupters will pick us apart, piece by piece.
We can wait for the government to intervene.
We can do nothing, and watch the broker cooperation via the MLS – which is the best thing for everyone involved – die a slow but certain death.
We can hope that somebody will find an answer. But it would have to include ways to eliminate agent shenanigans, invigorate consumers, and be a forward-thinking solution that benefits all.
The inquiry might start with creating a national MLS, or electing a real estate czar, or encouraging agents to keep their word and quit cheating their own customers out of what’s best.
But what if a thing was the answer?
The solution is LIVE AUCTIONS.
We can easily incorporate them into our regular business as the process to select the winning bidder. All other selection processes used today are subject to the listing agent tilting the table – with a live auction, all participants will be watching, and able to determine the actual winning bidder.
Could there be shill bidders who run up the price? Yes, but let’s insist that every buyer is represented by a realtor – that way, at least the agent’s reputation is on the line.
Live auctions would keep listing agents and buyer-agents employed, though the fee structure may be in flux. But our commissions are already under attack, so let’s take a chance that consumers will agree to pay a reasonable fee for these live auctions, and the other additional benefits provided by realtors.
A live auction doesn’t have to be a showy, champagne-filled soiree with a fast-talking auctioneer. They can be as simple as gathering the buyers around the living room, in a rather informal setting.
I am offering the live-auction strategy to my sellers as the fairest and most effective way to select a buyer, and let the full transparency be the best way to reach top-dollar.
Here’s an example – catch the winning agent’s comments at the 9-minute mark:
When you find the right home, don’t lose it. Get Good Help!
NAHB regularly conducts national polls of American adults and home buyers in order to understand new trends and preferences in the housing market. This is the third in a series of posts highlighting poll results, as presented during the 2018 International Builders’ Show in Orlando, FL. See previous posts on tiny homes and driverless cars.
A recent poll revealed that most prospective home buyers actively involved in the search for a home have been looking for a significant amount of time. In fact, 61% have been trying to find a home to buy for three months or more, while the other 39% have been looking for less than three months.
The natural follow-up question to those who have been unable to find a home after searching for three months or longer is why?
Forty-two percent say they ‘can’t find a home at a price I can afford,’ 36% ‘can’t find a home with the features I want,’ 34% ‘can’t find a home in the neighborhood I want,’ and 27% were able to overcome all these obstacles but ‘continue to get outbid whenever I make an offer.’
This result shows there are several important reasons why prospective buyers haven’t been able to pull the trigger, but the most important one is lack of affordability – not being able to find a home at a price point they can afford.
Another reason we should sell homes by live auctions…..Hat tip SM:
A local developer and prominent real estate agency conspired to prey on Chinese nationals and inflate luxury home prices on the Eastside for their own profit, according to a lawsuit filed in Seattle on Thursday.
Two plaintiffs who bought adjacent newly built homes in Kirkland allege that their broker at Realogics Sotheby’s International Realty was actually working on behalf of the builder selling the homes.
Jie “Gabby” Jiao and the married couple Maoqi Zhang and Wei Fan hired Realogics Sotheby’s broker Connie Blumenthal to buy their first homes in the United States in spring 2015.
Realogics has aggressively targeted luxury homebuyers in China and is one of the top brokerages for foreign buyers in King County, and Blumenthal has a glitzy website where she boasts her connections in Hong Kong and million-dollar home sales locally. The company and Blumenthal call the claims “baseless.”
Both buyers relied heavily on the expertise of Realogics Sotheby’s and Blumenthal to understand the local market. They were told there were multiple offers on the table and that they needed to bid more than $2 million each to buy the homes, west of Big Finn Hill Park, the lawsuit says.
But when they arrived in the area after the deals closed, they discovered the homes weren’t as promised, and later found out there was no evidence that other buyers were interested in the homes — suggesting they had badly overpaid based on their agent’s advice, the suit says.
One of the buyers, Jiao, was so dissatisfied with the home’s condition — among other things, it did not have the promised backyard or bedroom lake views — that she put the house back on the market. Even with her new broker aggressively marketing the home and offering a free Mercedes to a potential buyer, she wound up selling it for $1.67 million last June — a $338,000 loss over a two-year period, despite the region’s red-hot real estate market.
The other buyer’s home is assessed at $1.46 million, or about $745,000 less than the couple paid.
The Chinese nationals’ attorney, Dave von Beck of Seattle, said he found “what looks like collusion” between Blumenthal and the seller of the home, Alex Dudko of homebuilder Unique Design & Construction Co.
After issuing subpoenas in discovery, according to the suit, the attorney found emails and check stubs showing Blumenthal — the buyers’ agent — was actually working directly with Dudko, the seller, at the time of the sale.
One check showed Dudko paid Blumenthal $20,000 after the sales for “services,” according to the suit. The suit calls the payment a “kickback” for Blumenthal bringing the buyers to the developer.
In an email to Dudko around the time one of the sales closed, Blumenthal referred to a “bonus just between you and I.”
“Let’s meet for dinner and margarita’s again when I get back!” Blumenthal wrote to Dudko. “I need a new handbag :)”
This start-up has the right ingredients, but their auctions do have a reserve amount and no buyer-agent commissions, which cuts out other agents. They say “No Double Ending’, but when the buyers are unrepresented it puts the listing agent in an agency position – if the buyers ask a question, and the agent replies, an agency relationship has been created.
Every start-up wants to beat out realtors, and think that the consumers will trust their faceless, unproven venture instead:
TORONTO, Oct. 18, 2017 — There is a new way to buy and sell real estate in Ontario. With today’s official launch of On The Block Realty, the uncertain and often frustrating process of trying to navigate the home market has taken an innovative step forward. This brand new real estate brokerage based in Toronto, has opened its doors to the public, offering new unique approaches to the industry.
Chief among these advancements is the development of a cutting edge online auction platform that is aimed at bringing much needed transparency to buyers and sellers. The home buying process has been protected by silent bids in many situations, leaving buyers confused about what price to pay, and sellers concerned that some buyers may not have offered their best price. Inspired by the successful practice of real estate auctions in countries like Australia and the UK, this new system offers an exciting alternative for sellers who want to be certain they have maximized every bid from prospective buyers. It also ensures that every buyer has an equal opportunity to buy without any secrecy guarding the process.
“This isn’t about changing or fixing anything, it’s about evolving,” says CEO Daniel Steinfeld. He adds, “People deserve a choice when they make the biggest financial decision of their life. They also deserve clarity about every aspect of the transaction. We provide that.”
While the auction platform is the most distinguishing feature of this premium brokerage, there are several other features that the company believes will set it apart from the traditional brokerages in Ontario.
There is a ‘No Double Ending’ policy that ensures both sides of a transaction are never represented by the same Realtor. President and Broker of Record Katie Steinfeld says, “It is impossible to fathom that people with perfectly opposite financial objectives could have their best interest adequately represented by the same person.” She continues, “This is especially so when that individual stands to make more money by being on both sides of the transaction.” While the Ontario government and real estate industry have diverted from the point of protecting the consumer’s best interest, On The Block has done what makes the most sense – disallow the concept from their business model.
Prospective buyers without representation can still fully participate in a purchase or bidding process, but will not have a client relationship with On The Block – and if they choose to purchase without representation, there is no additional commission payable by either the buyer or the seller. “Buyers are entitled to an understanding of how commissions work. Just because it is widely positioned that the sellers ‘pay’ commissions, that cost is directly coming out of the sale proceeds, and ultimately a cost to the buyer,” Mrs. Steinfeld explains. On The Block’s Transparent Commission Policy explains that buyers should only pay for the service they receive, and so purchasing without representation shouldn’t cost them the extra 2.5% that often get baked into the purchase price.
Beyond the increase in transparency, the company provides a first of its kind ‘all inclusive’ approach to selling a home. One of the most unique included features is that homeowners are given a week in a partner hotel during the selling process to take away the stresses of cleaning and constant vacating that come with showings of the property. This is in addition to perks including professional photography, home inspections, and one of a kind custom signage for every property. “We are trying to sell a home, not ourselves,” Mr. Steinfeld says. “The high end signage is the largest legally allowed, and it is completely focused on the property it is trying to sell, not the brokerage or the name of the sales representative.”
Interested sellers are invited to use the platform at an introductory rate that includes all the bells and whistles, but costs less than half of what traditional Realtors charge.
It has been well documented that the real estate market could use a new approach. Perhaps this is the big change everyone has been waiting for.
About On The Block
On The Block is a premium real estate brokerage and auction house offering prospective home sellers the option to sell by auction or traditionally. As platforms like Uber and Airbnb have disrupted their spaces, On The Block is positioned to challenge a real estate process that for too long hasn’t seen significant change. With home prices continuing to fluctuate widely, and affordability diminishing, it’s more important than ever to give people some choice and power in the biggest selling and purchasing decisions of their lives.
They’re selling up and moving 800km up the coast but one Lane Cove family is so attached to the bright pink bathroom in their current home they’re offering the buyer $25,000 to preserve it.
The Miller family’s unusual offer is designed to discourage the new owner from renovating the 1960s-era bathroom, with its blue bathtub and sink and mosaic floor. They will pay the cash in five years if an inspection reveals it has been left untouched.
The family is moving to Byron Bay and the three-bedroom house is set for auction on September 23 with a price guide of $2.3 million.
The $25,000 was based on what they figured would be a higher amount than the cost of upgrading the bathroom.
I went on the auction mobile app shortly after the auction should have started today, and there wasn’t a trace of any action. On the MLS listing there is no mention of any auction, and it is an active listing, priced at $11,500,000 just like it has been since December 9th.
Did anyone else see or hear of anything?
The clip above from the auction-house’s website shows it being available for offers tonight, so it appears that the postponed auction was actually a dud.
Our reader elbarcosr described what might have happened after the first auction postponed on April 20th:
We all know the story. He wants 10 mil + and there aren’t any takers. If you open the bidding and there are no bids, is it really an auction?
Until we get to a point where sellers will commit to a reasonable opening bid with no reserve, auctions will remain a gimmick or a small refuge of the uber-houses. Problem is the opening bid needs to be below ‘perceived’ market value to generate the buzz and most sellers aren’t willing to do that.
But it was George T. that guessed specifically on the afternoon of April 20th that the auction would fail:
JtR: I am guessing it might not have a deal – a failed auction. George T
Pending any other evidence to the contrary, George is the winner of the Padres tickets! Congratulations George – great guess!
This doesn’t look good for the auction house either. If they are going to be advertising no-reserve auctions – which they did in this case – then they need to let ’em fly and the sellers need to bite the bullet.
The no-reserve auction of Matt Kemp’s house in Poway today was postponed until April 25th.
Why would you postpone for 5 days?
There has to be buyers. This company has been very successful in selling seven and $8-figure homes throughout the world, and they have grown exponentially. The auction process is a big hit, and it is the best solution for selling homes.
George guessed that it could be a failed auction before I saw it get postponed on the website. He’s looking very astute now….or is George an insider? 😆
The auction of Matt Kemp’s house in Poway is Thursday!
You can watch the auction live at 4:00pm Pacific Time on the Concierge Auctions mobile app, where you can also find their rules list. They will add a 10% buyer’s premium to the winning bid to determine the final sales price. If you didn’t know that and want to change your bid, feel free!
Kemp has $12,000,000 invested. The person with the closest guess will receive four tickets to a Padres game! Here are the guesses:
$4,200,000 – Rob
$4,735,000 – BAM
$5,325,000 – Amy
$5,700,000 – elbarcosr
$5,900,000 – Real Estate Rookie
$6,200,000 – Nick LB
$6,250,000 – Tom
$6,500,000 – LT
$6,519,000 – Matt V.
$6,900,000 – Daniel
$7,050,000 – Susie
$7,126.000 – Ed
$7,350,000 – Mark H.
$7,423,200 – Goughy
$7,875,000 – Kerry
$7,900,000 – kman
$8,000,000 – Name
$8,800,000 – Mike M.
$8,888,888.88 – JakeL
$9,100,000 – Lifeisradincarlsbad
$9,210,000 – CJ
$9,400,000 – Derek
$9,500,000 – Joe k
$9,600,000 – Mike Call
$9,750,000 – bode
$9,800,000 – Jenny
$10,000,200 – Janet
$10,527,000 – Eddie89
There is still time – leave your guess in the comment section below.
We all know the story. He wants 10 mil + and there aren’t any takers. If you open the bidding and there are no bids, is it really an auction?
Until we get to a point where sellers will commit to a reasonable opening bid with no reserve, auctions will remain a gimmick or a small refuge of the uber-houses. Problem is the opening bid needs to be below ‘perceived’ market value to generate the buzz and most sellers aren’t willing to do that.
But it was George T. that guessed specifically on the afternoon of April 20th that the auction would fail:
JtR: I am guessing it might not have a deal – a failed auction. George T
Pending any other evidence to the contrary, George is the winner of the Padres tickets! Congratulations George – great guess!
This doesn’t look good for the auction house either. If they are going to be advertising no-reserve auctions – which they did in this case – then they need to let ’em fly and the sellers need to bite the bullet.