In a recent decision, the National Association of Realtors (NAR) stated that Realtors who start marketing a property in any way, like placing a sign on the front lawn, emailing buyers, distributing flyers, calling prospective takers, and so on, will trigger the obligation to post the listing on the MLS within 24h.
Until now, some listing agents were often holding back from posting on the MLS to maximize the chances of getting the full commission by listing AND finding a buyer. This is why these listings are called private listings or pocket listings (as in kept in the listing agents’ pocket, with agent in full control).
If posted on the MLS, the listing could attract a buyer represented by another agent that would be owed 50% of the commission, split with the listing agent. So posting on the MLS was often delayed, restricting the pool of buyers and not maximizing the chances of getting the highest price possible for the seller. This violates the fiduciary relationship between sellers and listing agents and is now explicitly incorporated in the NAR code of ethics.
There has been some criticism, mostly explaining that some sellers may agree or require pocket listings; the question is how many are aware of the negative effects of a pocket listing on their interests? There are also very genuine cases in which privacy may be an issue, like in the case of celebrities, and it wouldn’t be surprising if the rule would affect these situations.
However, the benefits to the real estate market in general are significant, so it was about time that at least the NAR made its members adhere to a much more ethical practice, especially in times of such low inventory. In an age where image is important, this decision makes sense for the association, its members, and all the residential real estate world in general.
What this could mean for SELLERS:
SELLERS who list will have their property out in the open market almost immediately and many more buyers will be able to compete and push up the purchase price. For SELLERS who list properties on the open market from the start, there will be more competition. If the house fits the favorite idea of home for conventional buyers, that should have a small impact. The problem is for those who have a type of house that is not very sought after, even by selling below market value a sale is not that easy and fast. At Proxima Investors we have good news for these SELLERS, which is that we BUY these homes at market value, thanks to our particular exit strategy. With much more sophisticated deals on the selling side, we can purchase properties on very favorable terms with our SELLERS.
More properties will be available to pick from for purchase and more open houses to go to! Great news for those who love attending, but also more opportunities to find the best, the right, the most affordable and convenient home on the market.
Listing agents will have a powerful tool to maximize profit taken away from them. For Buyers’ agents it means a much greater opportunity to find the right property to purchase for their clients.
The bottomline is, in times of tight inventory and with new construction very slowly starting to meet demand, opening up more properties to the market is only beneficial and helps meet the markets’ needs. More importantly, it puts a stop on an unethical practice that was a poorly kept secret in the industry.
The question is: is it going to be enforced effectively? How long is it going to take to find workarounds? Time will tell…
If you, as a SELLER, think that this will impact your chances of achieving your goals, like time on the market, final purchase price, difficult buyers and so on, maybe we can present you a way to achieve your goals without all the negatives: call 617-999-0269 and let’s see what we can do for you with no commitment!