Philadelphia is poised for a highly competitive real estate market in 2020, Business Insider reported Dec. 12. That’s good news for sellers — especially after a common tactic for getting an edge in the market was recently clamped down.
For years, some sellers posted listings in private channels, like email blasts, social media alerts, and yard signs, that signal to insiders that a house is available before it officially hits the market. Known as “pocket listings,” these tactics allow real estate agents to test run a property before submitting it to a multiple listing service, a regional database that brokers use to share information about homes they sell. Sometimes it also lets them close deals early. But opponents say this approach hurts transparency and limits competition that would ultimately benefit both buyers and sellers.
Hearing those complaints, Bright MLS — the listing service that represents about 95,000 real estate professionals in the Mid-Atlantic region, including around Philly — moved to regulate pocket listings in October. They now require agents to submit listings to the MLS within one business day of publicly marketing a property, and agents who violate the policy may be fined $5,000 by the service. Weeks later, the National Association of Realtors passed similar regulations. Some backlash followed: The national real estate start-up Compass, which has a growing Philly-area presence, sent a letter to Bright calling the policy “unlawful, anti-consumer, and anti-competitive,” The Inquirer reported in late November.
To gauge the fairness of pocket listings in the local housing market, The Inquirer’s opinion team turned to two area Realtors to debate: Should regulations go a step further and ban pocket listings outright?
Are real estate sellers truly getting the highest and best value for their homes? As low inventory has been an issue in the South Jersey/Philly area and nationwide for the past year or so, some Realtors have relied on tactics to increase their income — at the expense of sellers.
A marketing technique advertising a property is “coming soon” is meant to create excitement around a new listing. Through this practice, a Realtor posts the public notice and then schedules the first public showing seven to 14 days after the teasing began. The theory is to create excitement and demand. And by the time the home formally opens to the public for showings and goes live in the MLS, everyone should have had a fair chance to see the home and then make offers. It sounds like a good idea.
Unfortunately, some Realtors used the techniques to get their buyer in first before the home was open to all buyers in the market, pushing homes to go under agreement before they ever hit the general market. Was this truly in the best interest of the seller — or was it in the best interest of the agent?
Common sense says the more buyers you have interested, the greater the value and the best terms the home will bring. Why would you only allow 10 buyers to see your home when you could expose it to 100?
It doesn’t make any sense. The more demand there is for something, the higher the price will be.
As a listing agent who helps people selling their homes, I have a fiduciary responsibility to sellers: to obtain the best price and the best terms. By only allowing your house to be shown to a select few, I would be violating this responsibility giving a few agents I work with an advantage before the entire market can see the property and make their offers.
The National Association of Realtors and Bright MLS heard the complaints from many Realtors who said their buyers never had a chance to see or make an offer on the new listing. Under Bright MLS’s new policy to protect sellers, the first time a new listing is marketed in any way, the agent has one day to turn the listing into the MLS. The majority of professional Realtors I know of have welcomed this policy, as it allows everyone to do what the sellers have hired them to do: get the highest price with the best conditions in the shortest amount of time.
While there may be some legitimate reasons to advertise to a select group, by and large, pocket listings don’t serve anyone as compared with the larger population of buyers that would yield the seller much better offers and prices. The new Bright MLS policy is a good step toward doing away with the unnecessary practice of pocket listings altogether.
Anne Koons is an agent for Berkshire Hathaway HomeServices Fox & Roach, working for buyers and sellers in Camden, Burlington, and Gloucester Counties and Philadelphia. www.annekoonsrealestate.com
The “off-market” sale and “pocket listings” have created quite a stir both locally and nationwide. As president of the Greater Philadelphia Association of Realtors, I have received a lot of questions regarding the new policy instituted by Bright MLS, which the National Association of Realtors followed. Long story short, I support the new policy with one caveat — the restrictions should be relaxed to offer a bit more wiggle room for sellers.
The ideal regulations should respect the two most critical components in our industry: (1) there needs to be full transparency to the consumer, and (2) cooperation is essential in our business.
There are a few exceptions where an “off-market” listing might make sense but these represent an extremely small percentage. Most sellers would agree: We want full exposure of listings, not tucked away to where only a few people would know about it. In most, though not all, cases, it makes sense to have complete marketing and exposure for our listings. I would argue that those who oppose the new Bright MLS regulation, no matter how they spin it, are simply upset that they cannot potentially get an advantage on both sides of the transaction, whether it be an individual agent, a team, or an office.
I also worry that often when a seller agrees to a pocket listing, they might not know exactly what they agreed to. I have encountered sellers in my own work who were confused about forms they were asked to sign that arranged for a special listing situation.
But I do have a concern with the new policy: having 24 hours to submit your listing to the MLS simply might not be a long enough window in certain sales. Perhaps an agent is running a limited listing while they wait for professional photos to be returned by a photographer, or the sign company put up the advertisement immediately instead of waiting a day like they were asked to. Maybe a seller just might need an extra day to finalize the details.
I would certainly not want members overpolicing and calling in “I got you”-type messages to Bright MLS and GPAR because of the tight window. I think 48 hours is more fair.
The big picture also affects the impact of this policy. We’re in a sellers’ market, where oftentimes there can be multiple offers, and half a day, let alone one day, can make a difference whether a buyer can get an offer accepted or not. Once the market shifts to a buyers’ market, this debate will pretty much be a nonissue, as every seller and agent will want their listings made public ASAP for maximum exposure — which should always be the default.
Chris Somers is president of the Greater Philadelphia Association of Realtors and CEO of the Somers Team with Keller Williams Philadelphia. thesomersteam.com