When we joined Compass in the summer of 2018, it was clear that the evolution of residential resales was trending towards off-market sales. I said then, “we have to make sure that we’re on the right team”.
The National Association of Realtors tried to affect the outcome with their Clear Cooperation policy by making off-market sales acceptable as long as they are done in-house with no public marketing. Like all policy-making done by ivory-tower types who don’t relate to the reality on the street, they have legitimized a new opportunity for gaming the system.
I think the intention of NAR was to allow for the occasional private sale by celebrities. What they must not have considered was that all brokerages would design their own in-house system to provide privacy for anyone who wants it.
Then the coronavirus starts sweeping the country – won’t every seller want their privacy today? Are you going to let dozens of strangers into your house? You and your family could die! You need to sell your home privately.
The NAR policy makes sellers and listing agents pick a path – either the property gets listed on the MLS within 24 hours after public marketing begins, or you sell it off-market. If the private sale doesn’t work, sellers can opt for the more-public MLS sale later, so trying the safer route will be an easy choice for many.
Who do you list with?
What brokerage has the best chance of selling your home for top dollar now?
Compass has the in-house system, over 800 of the top agents in San Diego County, and we are ranked #1 in market share in Carlsbad and Encinitas. We are ideally suited to serve the private-sale market, and now we’re advertising it publicly.
Eventually, the MLS (and Zillow) will become the online marketplace of last resort like Loopnet, and buyers will be forced to work with an agent in every brokerage if they want to see all the inventory.
A broker from The Agency is hoping to mobilize support against the National Association of Realtors’ controversial ban against pocket listings, drafting a new petition to urge the repeal of a policy that many agents feel will disrupt the market and hurt their livelihoods.
“It feels as if it was done without a whole lot of thought for the person impacted the most, which is the seller,” said Jamie Waryck. “I, along with several colleagues, find that very frustrating.”
NAR’s policy, which was approved in November and is scheduled to take effect May 1, requires brokers to submit a listing to the Multiple Listings Service within one business day of publicly marketing a property.
NAR argues it will help make the business more transparent, but brokers, particularly in high-end markets like Los Angeles, Miami and New York, argue that pocket listings help protect sellers’ privacy and allow agents to be more flexible with asking prices.
“A homeowner should have the right to work with a realtor and decide for him or herself whether the home is sold with full exposure to the public, with limited access to the public, in total privacy or through a combination of any of these based upon the homeowner’s personal wants and needs,” the petition reads. “The National Association of Realtors has decided to remove this right from you.”
Top L.A. agents have previously spoken out strongly against the policy, including Agency CEO Mauricio Umansky and Hilton & Hyland’s Gary Gold.
“I think we should be policed somewhat,” Gold said in October, “but not treated like children.”
The MLS Statement 8.0 Clear Cooperation Policy is ‘a lightweight, middle-of-the-road policy that will just make the problem worse’ because it doesn’t go far enough. It’s so full of holes that it will only exacerbate the problem, and by the time they figure it out, it will be too late to fix it. It might be too late already.
The new policy just helps to define the ways that agents can avoid putting their listings on MLS:
Office Exclusives Are Allowed. Agents will shop around their new listings for days or weeks among their fellow agents in the office. Only once that avenue is totally exhausted will listings find their way to the MLS.
Submitted to MLS Within One Business Day. From now on, all listings will be signed on Fridays (or postdated).
Sellers Can Market Publicly. The listing agent isn’t supposed to publicly advertise the home, but……..
Showings Aren’t Required. Just because a listing is in the MLS doesn’t mean agents can show it. This is the oldest trick in the book. When an outside agents calls to arrange a showing, he/she is told that the property can be seen any time….as long as it’s between 5:00-5:05pm next Thursday.
No Penalties Mentioned. There has never been a MLS police, so any enforcement will be sketchy at best. But realtors love to rat out their fellow agents so complaints will be flying – but what will be the penalty? Most likely it will be the usual, which is a letter in the offender’s file for six months. Will it be that much?
Stop Using the MLS. If it gets too complicated to navigate the rules, agents will just stop using the MLS. This is why being on the right team is so critical now – if all the hot deals are sold in-house, then working at a small brokerage or being an independent broker will be detrimental. Those agents will only see the leftovers as the MLS becomes an afterthought.
Local compliance was first scheduled for March 1, 2020, but they pushed it back to May 1, 2020 so agents have six months to contemplate. Will we be sitting around discussing how important it is that we share our listings with each other via the MLS?
What’s missing is that no one in the industry is demanding that we share our listings with one another because that is what’s right for consumers and agents alike. Instead, our leaders come up with a lukewarm policy full of holes and no teeth. The spotlight will cause more people to find ways around the 8.0, and proudly conduct off-MLS sales because now they are the even-sexier option.
Yesterday, we entered into the final phase of the MLS implosion, with the latest blow being delivered by the National Association of Realtors themselves. Instead of strictly forbidding Off-MLS sales, they have tried to appease everyone by concocting a lightweight, middle-of-the-road policy that will just make the problem worse:
The National Association of REALTORS®’ Board of Directors approved MLS Statement 8.0, also known as the Clear Cooperation policy, at its meeting Monday. The policy requires listing brokers who are participants in a multiple listing service to submit their listing to the MLS within one business day of marketing the property to the public.
NAR’s MLS Technology and Emerging Issues Advisory Board proposed the policy as a way to address the growing use of off-MLS listings. The advisory board concluded that leaving listings outside of the broader marketplace excludes consumers, undermining REALTORS®’ commitment to provide equal opportunity to all. The policy doesn’t prohibit brokers from taking office-exclusive listings, nor does it impede brokers’ ability to meet their clients’ privacy needs.
Here’s the full text of MLS Statement 8.0:
Within one (1) business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants. Public marketing includes, but is not limited to, flyers displayed in windows, yard signs, digital marketing on public facing websites, brokerage website displays (including IDX and VOW), digital communications marketing (email blasts), multi-brokerage listing sharing networks, and applications available to the general public.
MLSs have until May 1, 2020, to adopt the policy.
Rationale: Distribution of listing information and cooperation among MLS participants is pro-competitive and pro-consumer. By joining an MLS, participants agree to cooperate with other MLS participants except when such cooperation is not in their client’s interests. This policy is intended to bolster cooperation and advance the positive, procompetitive impacts that cooperation fosters for consumers. The public marketing of a listing indicates that the MLS Participant has concluded that cooperation with other MLS participants is in their client’s interests.
An article about Compass agents who used a new off-market service called Aalto to sell a special house. Ethics and fiduciary duties are getting shrugged off, and instead the off-market sale has become the sexy option.
Hat tip to recently-married Susie for sending this in – congratulations to you and Mr. Right!
Because of the length of the renovation and the fact that there’s nothing else like it in their Sleepy Hollow neighborhood, Hansmeyer and her husband were loathe to put the home on the Multiple Listing Service (MLS). People were already fascinated with the property and she didn’t want a bunch of neighbors nosing around her home.
“We wanted the right people to know about it but we didn’t even want our neighbors to know it was for sale,” she said. “We didn’t want to be ‘those people’ that everyone was talking about, especially because it was going to be at a price point that hadn’t really been seen in that area before.”
At first, her realtors Laura Reinertsen and Kristin Sennett took the home on as a traditional “pocket” listing, talking to other agents in her network to see if they might have a buyer for the turnkey property.
“Every fixture and finish was custom made to her specifications and she is very particular about lines and design,” Reinertsen recalled. “Light fixtures lined up exactly with the line between the refrigerator and freezer. And everything was like that. It was perfection and we had to find somebody who would pay for perfection in an area where people wouldn’t ordinarily pay for that.”
The typical home in the neighborhood sells for about $700 a square foot. Hansmeyer was looking for more than double that amount. So her agents suggested Aalto, a new “private listing” service just for Marin County (it recently expanded to San Francisco as well) that splits the difference between the privacy of a traditional pocket listing and the mass exposure of the MLS.
It immediately made sense to Hansmeyer and her husband. “We both come from a retail background and understand the way people buy,” she said. “We felt like the ability to visit a website just made sense to us. It’ll get in front of the right people.”
Only buyers working with an agent can see the homes on Aalto, and even then the exact locations are cloaked so that only qualified, interested parties can tour the home. Sellers can only use Aalto if they have signed a listing agreement with an agent, and they must agree to sell if a buyer is willing to meet their requested price.
These prices may be higher, but because multiple offers are much less common on Aalto, buyers have the certainty of knowing that the listing price is the real price. There’s no need to play the underpricing to get multiple offers game because the whole point of Aalto is that you only need one buyer. Owners who wouldn’t even have listed their homes otherwise use Aalto “just want to see if that buyer is out there that might be willing to pay a price that other people can’t understand,” Reinertsen said.
The service went live in early 2019 and was quickly adopted by top-tier agents. Reinertsen and her team sold over $30 million in homes on Aalto so far this year, more than half their overall total. She believes the move has happened quickly because the market was hungry for just this kind of middle ground. “Before that people would ask, ‘What do you have off market?’ But there really wasn’t a vehicle to sustain that marketplace. We could say, ‘We have this in our pocket.’ But there wasn’t the exposure to keep it top of mind,” she said. “Aalto just keeps the information out there and circulating.”
And that’s important when homeowners are asking for prices even higher than their already expensive counterparts. These homes often take longer to sell and their owners tend to value getting their price and maintaining their privacy over a quick sale, Reinertsen explained. “Our clients are private people and I think a lot of them have been through the MLS system before. They know if they go that route every single neighbor is going to come through that home. Every single friend of the neighbor is going to come through that home. And that makes people uncomfortable,” she said. “And I think that they also believe, because our market is so hot, that if their home doesn’t sell on the MLS after 10 days on the market, they’re not going to get their number.”
The number Hansmeyer had in mind was $6.5 million. She and her realtor knew it was worth it, and they were willing to wait. “She was confident in her craftsmanship and we were confident in her ability so we knew the buyer would appear,” Reinertsen said. “It just needed to be out there.”
After several months, a buyer who Reinertsen called “perfectly matched” for the property appeared. It sold for $6,262,000 in April. Had the home been in Ross or Kentfield, she said, it could have sold for over $10 million.
The National Association of Realtors is attempting to regulate a change in the Coming Soon environment – see above. The way it is written, however, will just take us back to the days when off-market deals were done behind closed doors because they are permitting the ‘office exclusives’.
Coming Soons were the industry’s public admission that we do off-market deals, and to give you a chance to get your piece of them. But now the N.A.R. wants brokerages to pick a lane.
1. Comply with the new rule, and change the name of your off-market deals to ‘office exclusives’, where no one can see them.
2. Don’t do anything, and pretend that off-market deals aren’t happening at your shop.
3. Declare publicly that off-market deals are a vital part of your business, and keep marketing them as Coming Soons to the public, in spite of any changes in the N.A.R. rules. What are they going to do?
Numbers 1 & 2 above are the less-transparent choices, and the easier way to go for the agents who justify their off-market deals by saying the seller got what they wanted.
Number 3 is the fully-transparent admission of the truth – agents like to pad their wallets with off-market deals, and don’t see anything wrong with that.
Off-market deals aren’t going away, regardless of the rules. The existing rules already state that all listings are to be inputted onto the MLS within 48 hours, but it gets ignored and there is no policing or penalties.
It’s better for everyone involved – agents, buyers, and especially sellers – to put every listing onto the MLS to ensure full exposure so everyone can compete. Buyers would feel they had an equal chance to buy, sellers get top dollar, and all agents get a fair chance to earn a paycheck.
But N.A.R. and the industry’s upper management looks the other way. It will take a class-action lawsuit or new regulations from the federal government to bring real change.
Pocket listings should keep the excitement level higher for now.
From the Business Insider:
The ultra-wealthy are known for being exclusive, and the way they handle the purchases and sales of their multimillion-dollar homes is often no exception.
Now, that’s not to say the market hasn’t seen some very prominent, top-level listings. There’s the most expensive home for sale in the Hamptons, which is listed at $150 million, and, of course, Los Angeles’ Chartwell Estate, which was listed at $245 million and, before getting a major price cut, was the most expensive listing in the US.
But for those looking to keep the sales of their homes a little more under the radar, there are whisper listings.
Whisper listings, also known as pocket listings, are for-sale homes that aren’t available to the public. Off-market listings are popular among the ultra-wealthy and are bought and sold by word of mouth.
Los Angeles real-estate agentAaron Kirman recently told Business Insider that he’s a veteran whisper-listing agent -and revealed three main reasons why sellers keep their homes off the market.
Kirman is a top real-estate agent at the real-estate company Compass. He’s been in the industry for 24 years and has sold over $4.5 billion worth of real estate since the start of his career. In 2019, REAL Trends named him the 10th-best real-estate agent in the country by sales volume.
Here’s a look at what compels wealthy homebuyers to keep their houses off the market and to instead opt for whisper listings.
1. Sellers can list their homes for higher prices through whisper listings.
By not putting a home on the market, the seller avoids value expectations, Kirman explained to Business Insider. With whisper listings, sellers have the advantage of pricing their homes above an area’s median listing price.
According to Kirman, sellers see this as an advantage because they are able to price their homes as high as they want regardless of the current state of the market.
“If you go live on the market, you have to publish a price. By not going live, you’ve never been public on a price so you don’t necessarily have to go down,” Kirman told Business Insider. “I’ve had sellers up the price of a whisper campaign because they have nothing to lose.”
2. Whisper listings can be used to keep a seller’s personal business out of the public eye.
Whisper listings can serve specific purposes, particularly when it comes to privacy.
For example, if a seller doesn’t want to put a home on the public market for political reasons, such as a divorce, they’ll use a whisper listing instead.
“Sometimes there’s political reasons as to why people don’t like them on the market whether it’s divorce, business reasons, or they just want to keep it quiet,” Kirman told Business Insider.
3. Whisper listings are exclusive and often viewed as a symbol of wealth.
Some sellers prefer to use whisper listings because they are more exclusive than public listings and, as such, are oftentimes seen as a symbol of wealth. However, Kirman told Business Insider that he doesn’t think using a whisper campaign, for the sake of exclusivity, is effective in today’s market.
And within that, there’s the potential downside of missing a prospective sale simply because the agent is not connected to the right person.
“The thing is, I don’t know everybody. So I always tell people there may be that one multimillionaire or billionaire that, because you’re not out there [on the public market], you missed – and they will go buy another house that was public,” Kirman told Business Insider.
We’re excited to be hosting our first ever ZOOM meetup with James Harris (Million Dollar Listing Los Angeles & Founding Partner, ThePLS.com). We’ll be discussing Los Angeles real estate market trends for Q2 (and beyond) and James will be sharing his take on things.
There was a CB realtor from Santa Monica who said his market has slowed down, with many price reductions, fewer multiple offers, and longer market times. A discussion ensued – my takeaways:
A. The market is level (at best) and sellers need to be realistic. You can spend a million dollars on advertising, have the best photography and videos, and do open house every day, but if the price isn’t right, it still won’t sell.
B. James thought open houses are a good way to expose a property to the market, and for knowledgeable agents to impress the attendees about the value.
C. James also said that when it’s slower, it’s better to test pricing off-market first. (But wouldn’t it be natural for sellers to say, ‘let’s test the price on the open market to find out for sure.’)
D. When a home is on the open market but not selling, it’s better to lower the price in weeks, not months.
Those sum up the basic fundamentals for today’s market.
I suggested that to enhance the value of private-listing clubs, they should limit membership to the top agents only, but they didn’t want to get into it. They did like my idea of having more webinars where agents can discuss topics and listings.
The club hasn’t made much of an impact yet in the San Diego area. There are only 34 listings county-wide on the website, and some are older and/or already sold. Curiously, one had been on our MLS this year, but expired and is now on the PLS only as an off-market opportunity at virtually the same price.
The other large private listing club, Top Agent Network, is limited to the top 10% of agents in a region (based on volume). They were thinking of opening in San Diego, but I haven’t heard any updates lately:
There may come a day when the private listing clubs have an impact, but it would take their leaders to constantly sell the benefits to agents – and those are people who have become wary about the benefits from the traditional MLS (if any). If an agent wants to pursue an off-market sale, then it’s too easy for them to throw a sign in the yard and wait (if the price is right).
More tip-toeing around the Coming Soon topic in Realtor Magazine yesterday:
The surge in off-market “pocket listings”—those held off the MLS in favor of secret channels and networks between agents or within a brokerage—is a growing issue in the real estate industry.
In markets starved for inventory, real estate professionals are struggling with being kept out of these secret dealings for homes that their buyers could potentially want.
In markets such as Los Angeles, for example, reports say that up to 30 percent of sales are being withheld from the MLS for the sake of more private channels, according to some brokerage estimates.
In response, some brokerages—and even MLSs—are looking for ways to expose these listings to a larger audience. One of many recent launches in the past month came from the brokerage Compass, which allows its real estate agents to post their listings to Compass’ website days before sharing them with the local MLS and third-party portals, like realtor.com®. “Compass Coming Soon” is available nationwide in markets where the brokerage operates.
“This will help our agents get a head start on marketing while still getting the property ready for market,” Compass CEO Robert Reffkin reportedly shared with Compass real estate professionals in an email. “By harnessing the power of pre-marketing, [the listing] actually shows up twice in everyone’s alerts: once when it hits Compass.com, and again when it hits the open market, doubling potential exposure.”
Pacific Union International, which Compass acquired in late August, had launched its own solution to handling the disruption from the growing prevalence of pocket listings in May with “Private View,” debuting $400 million worth of exclusive property offerings. But its portal of off-MLS listings can be viewed by any registered users—real estate professionals from other brokerages as well as the general public. Registered users can see exclusively signed listings before they’re publicized on the MLS. The portal is currently available in northern and southern California.
“Our agent-to-agent portal allows our sales associates exclusive access to Long & Foster properties that are not yet in the MLS,” Barry Redler, chief marketing officer for The Long & Foster Companies, said in a statement announcing the portal. “Having this platform not only allows us to respond to certain seller requests but also gives our agents a leg up on the competition by helping their buyers more easily find a home in a tight inventory market.”
MLSs are searching for the answer to expose these homes listed for sale, which the seller may wish to keep secret. The Chicago area MLS, Midwest Real Estate Data, launched the Private Listing Network in 2016 as a separate feed to share information to registered brokers about “coming soon” listings. These are not displayed publicly. MRED officials cite it as a way for real estate professionals in their area to premarket listings that aren’t ready to show yet or that are in the process of being renovated, repaired, or staged prior to being marketed publicly. It’s also a way to test the price, as a range can be entered.
But some brokerages and MLSs are taking a firm stance against the practice of pocket listings or “coming soon” forms of premarketing. Since 2013, Northwest Multiple Listing Service—serving the Seattle area—has prohibited its members from promoting or advertising a property until it is listed in the MLS.
Off-MLS deals amplify concerns about limiting exposure of the property “to a select group of agents to the detriment of the seller and other MLS members,” Tom Hurdelbrink, president and CEO of NWMLS, told REALTOR® Magazine.
Nobody wants to project how this will play out, but it seems obvious. Every brokerage will operate a Coming Soon program, and the MLS will become the marketplace of last resort.
When the bluff-top mansion at the end of Malibu’s Sweetwater Mesa Road sold for more than $30 million in 2016, it looked like the end of a years-long intrigue involving the playboy son of the president of an oil-rich African nation.
Instead, the sale and a quick flip of the property for nearly $70 million has opened a new, scandalous chapter. This time, instead of an accused kleptocrat and the U.S. Department of Justice, the key players are a celebrity real estate broker and an insurance company.
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