Compass intends to comply with NAR’s Clear Cooperation Policy MLS 8.0. In addition, the corporate staff will work the MLS to see if we can create a Coming Soon section, like many other areas are doing.
The 8.0 policy legitimizes the Coming Soon marketing, and allows for the Office Exclusives, which is already set up on our internal website. This is why we went to Compass, because it was clear that the game was changing, and the biggest brokerages with the best listing agents would be the most successful – while the little guys get squished.
After less than two years in business, here’s how Compass is doing in Encinitas. Year-to-date sales:
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.
The inventory ‘shortage’ is limited to the lower-end. If you can spend more than a million, there are 785 choices today, which accounts for 92% of the houses for sale between La Jolla and Carlsbad.
How the mix has changed:
NSDCC Total Number of Listings Between Jan 1 – Sept 30:
# of Listings Under $1M
# of Listings Over $1M
% over $1M
As rates head back towards 4% and more and more homes list for more than a million, expect increased sluggishness next year as affordability continues to diminish. Unless, or course, you are Lawrence Yun:
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.
Historically, buyer-agents haven’t really had to demonstrate their true value – most buyers just grab somebody they like. But now the buyer-agent compensation is going to be revealed in Washington, starting tomorrow – and it is inevitable that it will happen everywhere. Buyers making smarter decisions about who represents them is a great idea – hopefully they won’t select their realtor purely based on their rate! P.S. This is buyer-side only. I’m not sure the listing-agent rate will ever be public.
Starting immediately, the new rules will make it easier for homebuyers to figure out if their agent is only showing them houses offering a high buyer’s commission, said Greg Gans, a broker at Hardy Realty in Seattle who describes himself as “almost exclusively” a buyer’s agent.
“I know plenty of agents who see a 1% commission, and they’ll show the house, but they’ll say, ‘Oh, this is a problem, and you’re going to have to spend this amount of money on the kitchen,’” Gans said. “Brokers think of crafty ways to steer people away from homes where they’re not going to get the full commission. Or brokers may not put together the most competitive offer” on homes offering low commission.
In the long term, though, the change could lead to a system where buyers and sellers each compensate their own agent, said Windermere broker Russ Cofano, instead of funneling commission through the seller’s agent. That could make it less expensive to sell a home.
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