Real Estate NewsHot Markets Spawn Questionable Exclusive Listings
"Tis the season: The market"s hot and sellers rule, but if you want to
get the most for your house, don"t be a Scrooge about the Multiple
Listing Service.
REALTORS® critical of colleagues who entice buyers into bypassing what"s
considered residential real estate"s most valuable marketing tool, are
warning sellers not to be taken in by a market of multiple offers, fast
sales and especially, fast-talking real estate agents who ought to find
lumps of coal in their Christmas stockings.
"I am not talking about the difference between the for-sale-by-owner
(FSBO) and those who elect to use a REALTOR. I am talking about the
consumer who elects to have a REALTOR represent them, but unfortunately
picks a REALTOR who is more concerned about his or her wallet than the
consumer"s wallet," said Richard Calhoun, broker of Creekside Realty in
San Jose, CA.
The San Jose/Silicon Valley market of more than 1.6 million people, is
so hot there are fewer than 750 homes for sale from among the area"s
300,000 owner-occupied housing units.
In Silicon Valley and other hot markets, homes that sell within hours
after they are listed create in consumers an overwhelming sense of power
errant REALTORS prey upon with the exclusivity carrot, Calhoun says.
Not so, say other REALTORS. Some sellers have good reason to avoid the MLS.
"Certainly the home may have a relative market value of $270,000, but
if the seller needs it sold yesterday for whatever reason (divorce,
impending foreclosure, immediate relocation, a need to raise cash,
closing on another home, etc), then it"s foolhardy to hold out for
absolute top-dollar," says Sharon Marsh a REALTOR with Coldwell Banker
in Plano, TX.
Resale homes competing with new homes can also put sellers in a bind
and make them consider the MLS alternative, "exclusive" or "pocket"
listings that never show up on the MLS.
"Even here in North Texas where it"s been a seller"s market for quite a
while now, we"re starting to see neighborhoods where it"s a completely
different story and the sellers are in tight competition with new
construction. When builders in those competing areas can offer deep
buyer and agent incentives to get inventory off the books before taxes
are due, it just makes good horse sense to list an existing home at an
aggressive price if you need to sell quickly," Marsh said.
If homes sell so fast, sellers and their exclusive listing agents
reason, why not reduce the hassle of the hordes of buyers an MLS listing
will bring?
For that matter, why even bother to hire an agent and pay a commission
when the agent likely won"t even have time to work for it?
Why?
A higher selling price, say critics of exclusive listings.
Money.
Listing your home on the multiple listing service, even for a short
while, exposes your home to all MLS-member real estate agents -- and
their clients, consumers looking to buy a home.
Otherwise, you can leave tens of thousands of dollars of equity on the
table.
"I can think of very few legitimate reasons for not putting a listing
on the MLS. Examples might include serious illness in the family or
extreme or embarrassing filth or messiness which the seller is incapable
of curing," said Susan Tilling, a Menlo Park, CA-based broker associate
with Coldwell Banker.
The MLS, considered a REALTOR"s most valuable marketing tool, is a data
base of homes for sale in a given community. Except for limited Internet
access and the few public MLS systems, the vast majority of MLS systems
are open only for listings from REALTORS and only REALTORS can see
complete listings.
Today"s computerized systems allow MLS operators to update the data
base and broadcast its contents as fast as someone can type in the
details of a new listing -- price, address, square footage, number and
types of rooms, age, style amenities, telephone numbers of the listing
agent, sales status and a host of other information about the
property.
In the past, MLS systems were localized, though no less valuable. With
today"s Internet boost, and ever more automated search engines,
virtually any REALTOR anywhere, tens of thousands of them, can know
virtually the instant your home is for sale.
The equation is simple, say those who poo-poo exclusive listings: more
exposure, means more buyers will see your listings. The more buyers
vying for your home the more likely you"ll get more than you are asking,
especially in a tight market.
"Agents price properties using comparable data.Very few buyers will
offer more than that asking without direct competition. Even full time
professional agents cannot possibly know how high buyers will go," said
Calhoun.
So why do some REALTORS suggest that sellers not use the MLS?
Again, money. Time too. Time is, after all, money.
A REALTORs prime motivation to take a listing exclusive is the
commission, critics say. A single REALTOR gets it all if he or she also
represents the buyer interested in the property. At the very least, the
commission remains in house, as the REALTOR attempts to sell primarily
to buyers represented by other agents within the listing REALTORs
brokerage. Some brokerage"s reward REALTORS for keeping listings
in-house.
If the REALTOR sells in-house it also makes for more congenial
negotiations with less hassle than with a tough outside competitor.
REALTORS also capitalize financially by turning exclusivity into a
marketing tool to attract buyers with the I-get-"em-before-the-MLS-does
pitch. Half a commission coming in more often can make exclusivity a
cash cow. The draw for the seller is exclusive agent who also represents
the buyer. That REALTOR can afford to offer the seller a reduced
commission, an attractive marketing tool.
Of course, this all raises the dual agency question.
One agent representing both the buyer and the seller or two agents (one
representing the buyer, the other representing the seller) from the same
brokerage in a dual agency transaction poses the possibility of a
conflict of interest no matter how much due diligence, fiduciary
responsibility or ethical behavior promised.
"The greatest potential for the conflict of interest which dual agency
may pose occurs when the very same person is both the listing agent and
the (buyers agent). The potential conflict of interest is greatly
diminished when two different persons are involved, even though they may
work out of the same office or perhaps different offices of the same
company," says Tilling.
"If sellers refuse to allow any offer to be brought by an agent from
the same large company they list with, then anywhere from 20 to 50
percent of the agents with potential buyers may be prevented from
showing it," she added.
So what"s a seller to do? Exclusivity or not?
Paul Joseph Joyner, broker-owner of Sommers-Ethan Properties in Santa
Clara, CA answers that question from a buyer"s perspective, after an
exclusive listing REALTOR told the buyer he could not buy the exclusive
listing unless the exclusive listing REALTOR also served as the buyer"s
agent.
"Question the rationale of the agent. Get answers to your satisfaction.
Remember also, there is nothing which precludes you as the buyer from
knocking on the door of the seller to ask the seller if he or she is
aware of what exclusivity means. You are one buyer who isn"t getting a
shot at the home. If the seller is aware, you should call the seller"s
own rationale into questions and be a wary consumer. Any situation in
which you are denied representation by your own agent, is one not in
your best interest," Joyner said.