Compass Exclusive Listings as a Comp Sale

[Tom D]

So every listing that sold within 3 days in the last 5 years was not a exposed to market comparable. Ok, if you say so. So you only use comps with what, 30 days on market as a reasonable time. These listings are being marketed by compass off the grid as we say, but once they put it on the MLS they list it as 1 day. You never been a realtor. You never saw a listing having been sold by the same office or lister. It's just like concessions now, with who know what was done sometimes. You don't use that sale?
You never knew that offices sometimes hold a listing to give their agents a lead on it. I was a broker, i speak from experience.

 

[J Grant]

This is what I’m thinking too but it is arguable whether it is exposed to the market- or at least this is the argument the Compass agent will certainly make when they hand you the comp that supports the sale price of the property you are appraising.

Agents provide RE appraisers with sales. We choose which sales become comps. A comp does not support their sale price. A comp supports our opinion of market value.

The OP has conceptual problems that go beyond their Compass question .
I take each individual sale on its own merits . I use sales that are FISBO and pocket listings at times, both might have more limited market exposure than open listing on MLS, but if the exposure was enough to bring an arms-length buyer to the table, then it was sufficient.
If a sale price is out of the prevailing range whether substantially higher or lower, you might point to more limited market exposure as a possible cause ( or not use it as a comp )

 

[sputnam]

This is what I’m thinking too but it is arguable whether it is exposed to the market- or at least this is the argument the Compass agent will certainly make when they hand you the comp that supports the sale price of the property you are appraising.

You'll have to decide. It is possible that the 'exclusive listings' constitutes a submarket.

 

[Phlyguy]

Agents provide RE appraisers with sales. We choose which sales become comps. A comp does not support their sale price. A comp supports our opinion of market value.

The OP has conceptual problems that go beyond their Compass question .
I take each individual sale on its own merits . I use sales that are FISBO and pocket listings at times, both might have more limited market exposure than open listing on MLS, but if the exposure was enough to bring an arms-length buyer to the table, then it was sufficient.
If a sale price is out of the prevailing range whether substantially higher or lower, you might point to more limited market exposure as a possible cause ( or not use it as a comp )

Obviously agents do not determine what the comparables are- if an agent hands me a “sale” they’re going to call it a “comp” and I don’t have the time or energy to correct their wording. This is a message board for appraisers I think most people knew what I meant by “an agent hands you a comp”

To dumb down my OP I am questioning whether these exclusive listings have adequate market exposure to be considered a market value sale. In my market a FSBO most certainly does not have adequate market exposure to be considered a comparable sale. 99% of the sales in my market are through MLS and the median days on market is around 10 days.
I guess the answer will be specific to each market. With basically all sales in my market going through MLS I don’t think something only marketed to agents via password on the Compass website will have proper marketing to be a viable comp.
As someone stated above though if the listing is put into MLS after it is under contract and the agent reports a marketing time of only a few days (which is common in my market) it will be difficult to tell that it was never openly marketed on MLS prior to being under contract.

 

[J Grant]

Obviously agents do not determine what the comparables are- if an agent hands me a “sale” they’re going to call it a “comp” and I don’t have the time or energy to correct their wording. This is a message board for appraisers I think most people knew what I meant by “an agent hands you a comp”

To dumb down my OP I am questioning whether these exclusive listings have adequate market exposure to be considered a market value sale. In my market a FSBO most certainly does not have adequate market exposure to be considered a comparable sale. 99% of the sales in my market are through MLS and the median days on market is around 10 days.
I guess the answer will be specific to each market. With basically all sales in my market going through MLS I don’t think something only marketed to agents via password on the Compass website will have proper marketing to be a viable comp.
As someone stated above though if the listing is put into MLS after it is under contract and the agent reports a marketing time of only a few days (which is common in my market) it will be difficult to tell that it was never openly marketed on MLS prior to being under contract.

When I see the zero days nd the agent puts a pocket listing on MLS to avoid being sued, etc, I assume it was not listed on MLS until the SC was signed - so it might have below typical MLS open exposure, but was still exposed enough to bring an arms-length buyer to the contract.

As we might agree, each comp and sale gets analysed on its own for each appraisal.

 

[Tom D]

Same model match, similar sale price, 1 day on market. Can't use it, not enough marketing time. I suppose it could be a comp #4,5,6 as additional support if you are anal about marketing time.

Remember fannie changing listings required on report for changing markets, because there weren't any. Being all sold in less than 10 days. I'm getting old, i remember when listings took months to sell,
and the MLS book didn't have any recent less than 3 months sales, because the books only came out every three months. So you were 3 months behind with the newest books came out.

However, those were better appraiser times.

 

[George Hatch]

I think its a mistake to assume MLS listings are the only legitimate form of "exposure to the market". What we are looking for are arm's length transactions among buyers and sellers who are well informed or well advised and are acting in what they consider to be their own best interests.

FSBOs. MLS entries with 0 days exposure, disclosed "for comp purposes only".

I routinely run into prior sales transactions with my own subject which were not listed in the MLS or other listing service at the time of the sales contract. That usually doesn't result in their pricing being out of line with the other sales of the day. Nor is it the result of some non-arm's length transaction. I can't make assumptions one way or another so I have to ramp up on my verification, and sometimes I just have to disclose that I was unable to determine the manner of exposure.

 

[ZZGAMAZZ]

They are holding it in house to sell it in house. Makes sense if there aren't a lot of listings in the area. And i'm sure compass isn't 1 small office. R.e. offices are hurting due to the lack of sales from the previous high. But as long as it does get listed, you will see days on market, '1'. Dead give away. So i don't care how they eat each other. I have enough issues with AMC zombie appraisers.

CURIOUS: What is the Compass marketing strategy? What advantage might exist by limiting exposure? Only thing I can think is that the protocol might be a strategy to enlist more agents in the compay. ?????

 

[timd354]

Part of the definition of market value is that the property was exposed to the market for a reasonable time. Listings that aren't exposed to the market, don't become comparable sales. However, if you simply ignore them, you will sooner or later, get a request from your Client... either to explain why you didn't use them.. or you may get a RoV.

On the other hand... if there is enough of that going on in your area... the 'elite' listings may become a separate market.

Properties can be exposed to the market in ways other than being listed on the MLS.

 

[Fernando]

Appraisers need to be aware of what's happening with listings.
MLS requires agents to put their listings into their system unless seller indicates otherwise.
Many brokers delay this put having it inhouse and try to sell it themselves.
Big firms like Compass are trying to change MLS rules and I haven't followed through but some modifications were to be done.
NAR going through many changes ever since they capitulated in giving up commissions.