Off market listings

[Fernando]

Real estate battle over secretive off-market listings heats up

When prospective home buyers come up empty-handed, seeing a “sold” sign on an ideal home that never showed up during their search rubs salt into the wound. What’s frustrating to so many is these nonpublic sales, often known as off-market listings, shortcut the transparency that’s meant to inform...

www.yahoo.com

Real estate battle over secretive off-market listings heats up​

Under an off-market listing (also known more pejoratively as a pocket listing), an agent markets the property before putting it on the MLS - using back channels to expedite the deal between private parties. This tactic is allowed under the CCP as long as the homes are marketed privately among agents within a brokerage or individually to specific potential buyers.

Now, a brokerage giant, Compass, wants to repeal this rule altogether - in effect, opening a bigger window for off-market listings - because it allegedly forces the release of too much information that hurts sellers.

The fight is expected to further escalate because the changes in commission rules will probably cut into agent and broker earnings. To offset that drop, larger brokerages have an interest in keeping their listings in-house and minimizing agent competition, which effectively keeps commission rates higher, said Glenn Kelman, Seattle-based CEO of Redfin.

“I have a hard time with brokers getting on their high horse about how this is [about] freedom and the American flag and apple pie,” said Kelman. “It’s the oldest game in business, which is trying to play a game of monopoly.”

“A lot [of these agents] work for the same brokerage, so there’s a financial incentive if the buyer’s agent and the listing agent work for the same company since they can double-end the commission,” said James Dwiggins, San Francisco-based CEO of NextHome.

As many as 10 or 15 percent of homes were sold off-market before the CCP rule was crafted as a response, Lund estimates. But once in effect, its broader intent seems to have worked. While off-market listings are hard to track, Bright MLS estimates that less than 5 percent of listings in its service area throughout the Mid-Atlantic region now are private.

 

[Fernando]

I'm surprise no comments on this issue.
Appraisers think off market listings not that important but it is. Something USPAP and GSEs don't teach. Only Real Appraisers understand its ramifications.

 

[Dublin ohio]

I'm surprise no comments on this issue.
Appraisers think off market listings not that important but it is. Something USPAP and GSEs don't teach. Only Real Appraisers understand its ramifications.

So how does a "real" appraiser find an off market listing. Aside from word of mouth from an agent which has happened to me, but only because the agent involved in the off market listing was also involved in an on market listing I was appraising.

 

[George Hatch]

If an appraiser can't see a transaction then neither can any of the market participants see it. Or use it in their own decision making. The definition of MV we use includes an explicit assumption of

"(3) a reasonable time is allowed for exposure in the open market"​

 

[Fernando]

It's not uncommon that sales in MLS was put there after the fact it sold.
It's obvious the listing agent sold it inhouse (you can see if same brokerage from MLS) or to other agents in private sale.
It's an injustice to the seller being not exposed to the market and usually does not reflect the true market value.
Those comps I use with caution and if have to use them, I comment on it and have significant role in my reconciliation.
Many appraisers don't care about agents involved but real appraisers do consider how the sales price can be skewed from such listings.

 

[Surf Cat]

Many appraisers don't care about agents involved but real appraisers do consider how the sales price can be skewed from such listings.

I'm a real appraiser.......but I don't care.

 

[George Hatch]

I usually go through the expireds and listings to see what didn't sell. I sometimes find an additional sale that way. Obviously moreso with the non-SFR properties.

I think it's good to be aware of what didn't sell at that list price.

 

[Fernando]

I usually go through the expireds and listings to see what didn't sell. I sometimes find an additional sale that way. Obviously moreso with the non-SFR properties.

I think it's good to be aware of what didn't sell at that list price.

I look at history of comps also.
Sometimes, the comp couldn't sell or expire six months ago. Then it sells later.
Market conditions change.

 

[Fernando]

I'm a real appraiser.......but I don't care.

I thought you were foremost a real surfer. Appraising is your hoppy.

 

[Surf Cat]

I thought you were foremost a real surfer. Appraising is your hoppy.

No.....my hoppy is Voodoo Ranger IPA's...

Why would I use an off market listing as a comparable? As George pointed out, it doesn't fit the definition of market value as it was not exposed to the open market. So, I wouldn't care about it.

So yes Fernando, I'm a real appraiser, a real surfer and a guitar slinger too....