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.
For those who ‘specialize in the off-market space’, here’s a new excuse to justify your unethical and probably illegal practices: “some buyers don’t want photos of the home they’re purchasing on the internet”.
The real estate market has heated up so much in certain regions that brokers are taking transactions into their own hands—or, rather, their pockets. With increasing prices and, seemingly, more buyers willing to pay an amount that’s leaving sellers with nice profits, the question these sellers keep asking is, “Why bother with the MLS?”
While the answer to that question varies greatly depending on who is asked, more and more brokers are saying don’t list on the MLS, or even Zillow, for that matter.
“It’s an opportunity for a savvy agent, who uses his or her network properly, to make more money for their client,” says Jon Paul Molfetta, a broker with Keller Williams Realty in New York and New Jersey.
“If sellers aren’t familiar with the concept of a pocket listing, I would expect that their area/location doesn’t warrant it. Savvy sellers know when they live in a hot market. They understand the value of having a strong broker with a large network. If they contract with the right agent, they can realize top dollar without the hassle of having every nosy neighbor or unqualified buyer through their home,” says Molfetta.
“Agents who lose touch will lose deals (and) miss opportunities,” says Molfetta. “When someone misses out on a property, they might be willing to overpay for the next one. Regardless, people will not underpay for a pocket listing. If you’re a strong listing agent who controls a portion of the inventory, you provide added value to both the buyer and seller. For the buyer who wants into the neighborhood, you offer the unique opportunity of finding a home before it hits the market. For the seller who is ready to list, you provide a pool of qualified buyers from months of successful marketing and proper lead capture. It’s a win-win.”
California seems to be a haven for pocket listings, where sellers are coming to their brokers and demanding it. Lori Steele is a specialist with Beverly Hills, Calif.-based The Agency, which launched a private national off-market platform last summer called The Pocket Listing Service (PLS). Steele says it’s been incredibly popular among sellers who value privacy and speed, and it helps all the agents under The Agency roof generate business for clients and cultivate their networks.
Steele is involved with The Agency’s expansion through Orange County, Calif., and she says The PLS is a big part of the appeal.
“About 40 percent of all of our deals are done off-market,” she says. “It’s important for seller discretion, and some buyers don’t want photos of the home they’re purchasing on the internet.”
If the uber-elite believe they need the privacy and are willing to leave mega-money on the table, then fine – pocket all you want. But the typical seller is better served by open-market exposure.
All brokerages are getting into the game, and before long, pocket listings could be the standard, which puts those who aren’t connected on the sidelines.
Buyers who feel a slowdown (and who wonder where the values really are) should proceed with caution when offered an off-market deal – how do you know if the price is right if it never hit the open market?
Do you have a trench coat?” the real estate agent asked, only half joking. The listing he was about to describe was so hush-hush that he and other agents had been required to sign nondisclosure agreements just to obtain the address. In order to get the broker’s tour of this supersecret, $16 million–ish Russian Hill home, I’d have to agree to keep quiet on the pertinent details—and maybe wear my best Deep Throat disguise.
Sound crazy? Not in housing-mad San Francisco, where mum’s the new buzzword in real estate. As many as 20 to 30 percent of agents’ high-end listings are now totally underground. That means no advertising, no listing sheets, no email blasts. In place of open houses, sales tactics for these homes include password-protected websites, phone-call-only marketing campaigns, and, as I found out, NDAs.
Alternatively called whisper, private, or pocket listings, this secretive sales method is increasingly common in the Bay Area, especially among wealthy, privacy-obsessed sellers intent on keeping their names and asset valuations away from prying eyes. Gregg Lynn, an agent with Sotheby’s International Realty, says that about half his listings these days aren’t officially on the market—and his clients’ rationales for doing it that way run the gamut.
There are pre-IPO tech founders who want to keep speculation about their financial outlook to a minimum; or Sand Hill Road types trying to project an air of modesty. And then there’s that oh-so-Silicon-Valley notion that building a whisper network of potential buyers gives a home a level of intrigue, and buzz, that’s priceless. “It’s like if you’re in a wine club: Are you in the basic wine club, or do you get invited to the exclusive events?” says Rachel Swann, a Noe Valley–based agent with the Agency, a luxury real estate firm with offices in Los Angeles and San Francisco. “People like that. Especially at the high end.”
In a typical home sale, agents upload information about a property to the local Multiple Listing Service, or MLS, as soon as the house is photographed. That info—photos, specs, property history—is then distributed to dozens of websites, including Redfin, Trulia, and Zillow, where it’s publicly available. To the would-be anonymous seller, however, that’s simply too much data for the world to see. And they’re willing to trade the extra half a million the house might fetch in a heated bidding war for the peace of mind that comes with privacy. “I try to make sure clients understand it doesn’t necessarily help them price-wise,” agent Nina Hatvany says of pocket listings. “It’s nice for other reasons. But does it get you the price? Probably not.”
The standard knee-jerk response about pocket listings is to insist that some sellers don’t want to be on the open market for personal reasons, and that’s fine. In reality, those should be limited to major Hollywood icons who are unsure of how much their star-power adds to the price of a home, AND those who are flat-out bamboozling the buyer – like these sellers, who just sold this property off-market for $11,000,000. The buyer’s agent has been in the business for two years and this is his only sale ever on his Zillow profile!
Eight months ago, the sellers paid $7,195,000 for it after 1+ years on market:
If the sellers are fully aware that they are engaging in an off-market deal, then fine. But most are being duped into thinking they are on the open market, but then all of a sudden – whiz, bang, boom, whoosh – and there is an offer on the table that is good enough to get them on their way.
It moves so fast that they never realize they weren’t on the open market.
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