the washington post.
saturday, november 16, 2019EZ10 11
EZthe washington post.
saturday, november 16, 2019COVER STORYShedding light on a disputed listing practiceIndustry rethinks ‘off-market,’‘comingsoon’tacticsAs if buying a home weren’t hard enough, the lack of properties for sale has made the process even more daunting. The problem has resulted in more intense bid-ding wars for the slimmer pickings and many house hunters — particularly those with modest means — be-ing shut out.¶What if you found out there are a lot ofhomes for sale but you and your real estate agent just don’t know about them?¶That’s what some buyers’agents say has been happening with greater frequency, particularly in highly competitive housing markets such as Seattle, SanFrancisco,Los Angeles and theDistrict.¶Now the NationalAssociation of Realtors (NAR) iscracking down on“coming soon” or “off-market” desig-nations, which generallyallow sellers to unofficially so-licit buyers under theradar without having the numberof days it is listed count againstthem when they go onthemarket. In addition, keeping these listings off thepublic multiplelisting service means buyers won’t knowif a seller has dropped or raised their price expectations.BYMICHELELERNERNAR votedMondayat its annual mem-bership meeting in sanFrancisco to barRealtors and brokers in its 640 affiliat-ed multiplelisting services fromkeep-ing listings off the services.It recom-mended that thedozensof other multiple listingservices it doesn’t overseeadopt similarstan-dards.The move is aimedat generating a discussionaboutthep ractice nationwide.A handful of multi-ple listing services—i
ncluding BrightMLs in theD.C. area,
Midwest R eal estate Data in Illinois andnorthwest MLs in the seattle area—had previ-ouslytakensteps tofine brokers and agents whofail to put their for-sale properties on the open market.
“This new policy will bringa ll available proper-ties into the MLs,” says Greg Zadel, a real estateagent with Zadel Realty in Firestone,Colo., andchairof the MLs committee ofnAR. “This way,every sellerwillget maximumexposure of theirproperty andevery buyer will be able tofind all theproperties forsale in their area.The consumerswill benefit more thananyone because thiswillmean the MLs marketplace willb e complete.”The newnAR measure, in line with the Brightpolicy adopted in october, requires properties to be listed on the local MLs withino ne business dayof beingm arketed to the public.Marketing includes fliers, yard signs, emailblasts, applicationsavailable to thegeneral publicand digital promotions on publicw ebsites, such asZillow or Realtor.com, brokerage websites,andagent networks that share listinginformationwithin a closed group.Compass reale state brokerage sent a pre-litiga-tion letter when Bright’s policy wasannounced inoctober that said the policy was anti-consumer and anti-competitive because it restricts thea bili-ty of agents to market properties outside of theMLs. Representativeso f Compassa nd Brighth aveexchanged letters and discussed ways to resolvetheirconflict over the policy and its implementa-tion.nAR members approved theClear Cooperationpolicy. The measure requires affiliated MLs sys-tems to adopt the changes byMay 1, 2020.The newrules pertain to other practices similart o “comingsoon” or off-market listings that maygo by othernames:l“ Pocket l istings” a re so named because listingagentskeep them in their pocket, makingthemavailable only to specific buyersor agents withintheiroffice instead of sharing them on the openmarket.
l“Private exclusive” or “officeexclusive” r efersto for-sale properties that can be found on real estate office websites but aren’t on the MLs.Because they are marketed a little bit—and maybeon social media, forexample—t
hey aren’t c onsid-ered the same as pocket l istings.nAR andBright, however, have made oneex-ception.They a llow“ office exclusives” for sellers—mainly high-profile peoplewho areconcernedabout privacy. B ut thep olicy s ays they can’t a dver-tise publicly throughsigns, social media, blastemails or brokerage websites.They can only bemarketed with one-to-one promotion within abrokerage and sellersmust signa waiver that theywant this andunderstand that their propertywon’t b e publicly marketed.“Finding a home to buyi s hard enough withouthavingyour optionslimited by pocket listings,”^says GlennKelman, Ceo of Redfin real estatebrokerage, headquartered in seattle. “Buyers andtheiragents shouldn’t have to know the secrethandshake or play tenniswith the right listingagent in orderto have access to any property onthe market.”^Pros andconssupporters of off-market listings say the prac-tice offers sellersan opportunity togenerate buzzfor their home sale as they are prepping the property and gives them a chanceto test thewaters to see if they canget the price they want.“A divorcing couple, forexample, may not wanttheirn eighborst o know they’re sellingtheir home,so they put the house in‘coming soon’status andquietlystart marketing it,” says KimHarris, re-gional presidento f Compassr eal estate brokeragein the District.“We had another client, a 91-year-old, who didn’t w ant tofix up his house if he didn’thave to, so he could test the market in‘comingsoon’ withoutexposing it to the full market.”To p Agentnetwork(TAn), which has 33chap-ters with9,900 agents across theUnited states,shares informationabout non-MLs propertiesand other topics through a private online commu-nity. TAn membership isavailableonly to agentswho are in the top10 percent of home sellers intheirr egion.
“The top 10 percent of agents do 90 percent of
the businessi n their markets, so marketing withinour network is not the same as pocket listings,whichare bad for buyersand sellers,” s ays DavidFaudman, Ceoa nd foundero f TAn. “ The majorityof the properties discussed on our site end up in the MLs but with a better outcome for sellersbecause of the discussion about pricing and mar-ket conditions.”If a buyercomes through theTAn networkbefore a property goes on the MLs,Faudman saysthat’s convenient for the sellers and the agent.“expert agents in our network share informa-tion with each other about homes andget input onpricing and suggestions about what improve-mentsneed to be made,” Faudman says.“Theseagents can show the property o r not.Wea lso haveagents posting about whattype of property theirbuyers want so they canfind out about propertiesbefore theygo o n the market.”But opponents say buyers cansometimes bedisadvantaged by thep rocess.“It happensoften that buyers call an agent andask why theira gent didn’t t ell them about a housethey might have wanted to buy,” says ChristineRichardson, president of thenorthern VirginiaAssociation of Realtors (nVAR) and a real estate agent withWeichert Realtors in GreatFalls,Va.“often, that house wasn’t listed in the MLs butit was on a third-party site or had a sign in theyard,” Richardson adds. “Buyers have a terriblefear of missingout. eliminating thepre-MLslistings will eliminate that shadow market.”Limiting the ability of all buyers to know aboutevery property o n the market h as a more insidiousinfluenceon thehousing market, including anunintentional negative impact on minority h ome-ownership, accordingto elizabethKorver-Glenn,an assistant sociology professorat theUniversityof new Mexico in Albuquerque.Whiler eal estate agents having the insidet rackon listings is nothing new, K orver-Glenn contendsthat theramifications ofexclusively marketing toa networkof other agents and clientsrather thanthegeneral public limits the ability of people ofcolor to compete for homes. shesays she believeseliminating pocket listingsis one of the easiestways the real estate industry could increase home-ownership among people of color.“During a yearof researchon theHoustonhousing market, I found that many of the whitereal estate agents I interviewed engaged in pocketlistings,while only one of the agents of color didthis,” Korver-Glenn says.“The white agents pro-motedtheir business aroundexclusivity to theirclients,but none of them considered what theywere doingexclusionaryeven though they hadoverwhelminglywhite clientsand marketed onlyto other whites.”Kelman, of Redfin, agrees.
“If you’re a top agent, you want people to thinkthat they won’t s ee allavailable properties withouttheirhelp, which is a powerful message,” Kelmansays.“But from the perspective of peopleof colorwho may lack that same kind of network, theyshould be able to seeevery property, too.There’s along history of the real estate industry being a mostly unwitting accomplice to all sorts of segre-gation in America and one of the simplest solu-tionsi s to eliminate pocket l istings.”Leveling the playingfieldThe practiceof pocket listings, or pre-MLs oroff-MLs listings, has grown in recent years, ac-cording tonAR. Pocket l istings cangenerate moremoney fora brokerage—or even an individualagent—i
f the buyers and sellers are bothrepre-sented by the same company or by the same agent, knowna s dual agency.“In a highlycompetitivemarket like ours, withfewer houses to sell, some brokerages try to con-trol the market by keeping more of their listingsin-house,” Richardson says.Private exclusive listings, while not only limited
toexpensive homes, are often used by wealthy
people to protect their privacy and limit theexposure of theirh omes to thegeneral public.new policies from Bright MLs andnAR alsodifferentiate between“coming soon” propertiesand pocket l istings.Pocket l istings, saysJon Coile,chairman of Bright MLs,typicallya re not market-ed to any other agents, onlyto potential buyers of aproperty.
Hesays the only issue withbrokerages an-nouncing a“coming soon” property i s that it needsto be announced in the publiclyavailable MLs aswell as on individual brokerage sites.“somebrokerages do all their marketing of‘coming soon’ properties as if theproperty is atotally public listing,except that theykeep it offthe MLs, so the onlypeople who can’t see it areotheragents unless theygo to the broker’s web-site,” Coile says.“We’re levelingt he playingfield sothateveryoneh as accesst o the same information,whichis good for small brokerages andgood forlarge brokerages.Most o f all,i t’s good for consum-ers.” sellers of pocket listingsmay be doing them-selves a disservice, some agents say. A handful ofsellers may care more about an easier sale than a higher price, Richardson says, but most want the highest p ossible price.
“While somea gentst hink off-MLs marketing iscreative and they have a big network of potentialbuyers, sellerswon’t alwaysget the highest salespriceif their property isn’t exposed to the fullmarketplace,” Richardsonsays.“The bottom lineis that it’s absolutely in the best interest of sellersto be in the MLs.It doesn’t make senseto notexpose your property to licensedagents whorepresent buyers.”Bright’s policy allows sellers to sign a waiver tokeep their listingout of syndicationto otherwebsites, and theiragents can also put notes inseelistingsont15COMING SOON
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