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Op/Ed

The dangers of pre-MLS, pocket listings, listing clubs, and off-MLS listings

Pre-MLS listings are used for a variety of reasons, but as they become more popular for their advantages, let us look at the disadvantages.

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off-market listings

There are some past real estate practices that are now explicitly illegal. Referral fees deemed harmful to consumers were explicitly banned by RESPA. Dual agency is likewise under scrutiny, with mandatory disclosures being created to discourage the practice and the practice is now illegal in several states, with more states likely to come. If a practice is bad for consumers, it’s not likely to stay legal for long, and those who engaged in the practice might find themselves in serious trouble.

Pre-MLS, listing clubs, pocket listings, and off-MLS listings all fall into this category. All of these involve an agent or broker keeping a property for sale off of the MLS, for sale to a buyer:

  • found by word of mouth
  • found by sharing the property with agents in the same office,
  • found by sharing the property with a larger group of agents over coffee, through email, or through Internet sites.

In all cases, the agent’s aim is to get the entirety of the commission, or at least to have it stay within his own brokerage or other group that provides the agent some advantage. Given everything we know about the dangers of these forms of non-listing for the client:

  • minimizing exposure to audiences, both local and on web, who might purchase the property,
  • minimizing the number of offers received, and
  • property fetching lower sales price,

the agent is clearly privileging his own interests over the client’s. Like referral fees and dual agency, this practice is bad for consumers.

Even the government has taken action

We’ve already seen those “in the know” enact rules requiring MLS listing. In August of 2013, Fannie Mae said that it wouldn’t approve short sales unless the property had had an active MLS listing for at least five straight days including a weekend. I think that’s just the start – the government is aware of the financial harm caused by not giving a listing proper exposure. Take heed.

Some might ask, “Is MLS entry really needed to get top dollar for a listing?” Where it has been studied so far, the answer has been, “Yes!” In one study (at MLSListings), for every $100,000 of home sold, not having an MLS listing cost the sellers an average of $15,000. Do agents really think that once a consumer realizes they may have taken a $150k haircut on that million-dollar home just so the agent can get an extra 2-3% on a transaction, they’re not going to take action?

Financial harm to the consumer isn’t the only issue at hand

Financial harm to the consumer isn’t the whole of the issue either. In a recently published article, attorney Grant Harpold made the following additional points:

  • If a consumer makes a claim against the broker, the insurance company carrying the liability insurance may “take the position that intentionally leaving a property off of the MLS is not covered, i.e., no REALTOR® should be that careless.”
  • Such listings may actually “deny certain people access to the purchase of property. If only certain buyers are allowed to bid on the property, then the REALTOR® runs the risk of being party to a discriminating act, even if unintentional.”
  • A broker or agent may also “be subject to antitrust laws that are in place to promote competition.”

Handling off-MLS listings when clients request them

While the practice may still be legal, Mr. Harpold recommends that agents engaging in the practice explain the risks to the property owner and have them formally sign off on all of the risks – in writing. There may be instances where a sophisticated client – a celebrity or other high-net-worth individual – wants to use an off-MLS listing to protect his/her privacy.

If so, s/he can sign a form explicitly acknowledging the dangers of such a listing. It is worth noting, though, that there are alternatives to off-MLS listing in such a case, such as restricting the listing’s Internet display in the MLS context.

The practice is increasingly popular

In desirable areas with a shortfall in housing inventory, such as the San Francisco Bay Area, this practice is increasingly popular. Fully 29.4% of listings in Contra Costa County, in the Bay Area, were off-MLS in 2012. This provides increasing occasion for bad outcomes and even abuse, all of which will filter back to regulators, trial lawyers, and legislators. Without some tangible incentive for agents to keep listings within the MLS, an unwanted, imposed solution is likely down the road.

If the practice of off-MLS listing continues, we may expect one or more of the following outcomes.

  • NAR will step up and require MLS entry as a standard of practice.
  • Attorneys will smell blood and start a class action lawsuit against brokerages, leading to the practice’s decline.
  • A law will be passed prohibiting the practice.

The real question I’m left pondering is whether this practice will worsen perceptions of the industry before the trend fades away due to market conditions or is stopped by legal means.

This editorial first published in May 2014.

Matt Cohen has been with Clareity Consulting for over 17 years, consulting for many of the real estate industry’s top Associations, MLSs, franchises, large brokerages and technology companies. Many clients look to Matt for help with system selection and negotiation. Technology providers look to Matt for assistance with product planning, software design, quality assurance, usability, and information security assessments. Matt has spoken at many industry events, has been published as an author in Stefan Swanepoel’s “Trends” report and many other publications, and has been honored by Inman News, being listed as one of the 100 Most Influential Real Estate Leaders.

Op/Ed

5 ‘lies’ HGTV tells viewers that impact the housing market

(OPINION EDITORIAL) HGTV has long been a fan favorite for renovations and home searches, but is the information they portray accurate? What influence does this really have on consumers?

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Man watching HGTV show on tablet device.

It’s no secret that reality television very often does not, in fact, depict reality. One of the most frequently viewed “reality” television networks is HGTV, which features a wide range of home renovation and DIY shows that cater to a variety of home improvement enthusiasts.

While HGTV wants you to get lost in the latest episode of House Hunters, you may be surprised to know that these episodes are in fact, at least partially scripted.

Although there is nothing wrong with enjoying a good home improvement show, especially those ever-addicting home flipping shows like Fixer Uppers, there are a few things HGTV portrays that are less than accurate. Here are five of those things you may want to consider, or have your clients consider before embarking in the home ownership process yourself (or with a client).

Consider the following…

1. Realtors work a lot harder/longer than people think

Unfortunately, HGTV often portrays real estate agents as people who do the bare minimum for their clients, when in fact most Realtors® go above and beyond for their clients.

According to CheatSheet, Sissy Lapin, author and co-founder of ListingDoor, stated shows like House Hunters “make the agent look like they’re just these lazy people who show two houses and negotiate $1,000 off the asking price,” rather than showing the whole host of duties a good agent performs for their clients.

Good agents tackle the whole home buying process; informing clients about what they should consider when selecting a home, negotiating a better deal, and making sure that they do their very best to ensure nothing goes wrong throughout the entire process from start to close.

This is not the impression a potential homebuyer would get from HGTV alone. Realtors are an amazing asset to have on your team when you’re considering buying or selling a home, and they do a lot more than HGTV portrays.

2. Over-emphasizing the importance of new features

HGTV shows make a production out of showing homeowners frantically searching for the “perfect home” with all the “must have” features. In all fairness, sponsorship from the latest and greatest in home innovations is how they make some of their money. While it’s certainly understandable that most homeowners have a list of things they want in a new home, worrying sellers into thinking they won’t be able to sell their home unless they have these highly coveted features is an entirely different thing.

Lapin commented, “I can’t tell you how many times that I go into a house and they’re like, do you think it would add more value, or do you think it would sell faster if I put in granite countertops?” In fact, like many other trends in homes, consumers are moving away from granite to other sustainable materials. But you would never guess this if you believe everything HGTV is promoting on their shows. Again, the key is to do your own research. Consult a professional and inquire as to what would increase your home’s value.

3. Downplaying the expense of renovations

If you took what HGTV shows to heart, you’d be inclined to believe that major home renovations can be completed in mere hours for a few hundred dollars. If you’ve ever seen Property Brothers, you know the brothers function on extremely fast renovations schedules and very low budgets. This is likely not the situation you’ll encounter if you decide to renovate your own home (or a project home). Even contractors have complained that these types of shows are giving people an inaccurate picture about renovation expectations.

“Remodelers say that shows such as Love It or List It and Property Brothers, which often cram whole-house remodeling projects into too-small budgets, give clients the wrong impression regarding pricing and time constraints,” notes Tim Regan, writer for Remodeling.com. Also, according to CheatSheet, some renovations may not even be up to code.

One couple who appeared on Love It or List It are suing the show’s production company stating their home was “irreparably damaged” and a that a licensed architect was not hired.

To ensure your next project goes smoothly the best thing you can do is consult with a licensed, bonded, and insured contractor. They will be able to give you a time table and price range that is more realistic than what you see on HGTV.

4. Location, location, location

While not as important as the other factors on this list, in my opinion, it is certainly something to be considered. HGTV shows like House Hunters very rarely focus on the importance of location with the home buyer.

Lapin stated in one episode, she watched as a couple chose a home because of its stylish features even though it meant they would have to make a 45 minute commute to work. While everyone is entitled to make their own choices, Lapin makes a good point in stating that she would have “made [her] client make that drive to work three days in a row” to see if they would still enjoy the location of their new home.

This is one of the many benefits to having a Realtor® on your side: they know the ins and outs of home values, location, and more. Getting your information from a Realtor® will take you a lot further (and very likely save you money) than the information you can get from HGTV programming.

5. Buyers know more than some think

Contrary to what HGTV would like you to believe, buyers are not naïve. For the most part, buyers are real-world savvy and have a good idea about what they need and the price range they can afford. This is the age of digital technology, and most buyers are putting that technology to use, researching before they set out to buy something.

Sites like Zillow give buyers an idea of what’s available for how much, and they can even see what the home looks like without getting out and driving to the location. HGTV tends to show buyers that don’t know what they want or how much they can spend.

This is likely done to make their professionals seem more knowledgeable, but in reality, as Lapin states, “the buyer, the consumer, is very savvy and I feel like that’s not portrayed. Buyers have a lot of confidence now.” This isn’t to say most buyers don’t still welcome guidance from a professional, but they do have a general idea of what they want and what they can spend, by and large.

Instead of viewing HGTV as an example to follow, or representative of the market as a whole, it should be treated as entertainment.

While there are some aspects of the show that may be useful to some viewers, such as window replacement and selecting new flooring, it definitely shouldn’t be held as the gold standard for service or the home buying experience.

Consumers’ best bet is to consult an industry professional who can give you a more realistic picture of cost and time.

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Op/Ed

Career breaks can close doors, but may open a new window

(EDITORIAL) A job pause can be maddeningly frustrating, but they can also open new opportunities to grow or start anew.

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Career change

What’s worse than stand-still traffic?

The start-stop traffic.

In a standstill, you know where you stand… still. In stop n’ go n’ stop again traffic, you have no clue. You go from 5 to 50 again for all of three feet, then back to 5. Eventually, you don’t even care about getting to your destination anymore, just so long as the tedium ceases.

My jobs went almost exactly the same way.

Retail work, career work. Retail work, career work. Retail work, career work. And each time I had to take a pause, I didn’t have enough time, money, or interest to keep up with the rising trend of ‘content creators’ who can film, edit, script, photograph, edit THOSE, AND do blogs and emails replacing copywriter positions. So I just stayed scrambling until I could ‘relax’ into a career gig that ended shortly for one reason or another.

Even though I left each advertising job under different circumstances, in late 2019, I realized, ‘Okay, maybe it’s ME. Maybe if I’m this frustrated with the traffic, I need to pull off the road.’

The last shift saw me go from copywriter, to house cleaner, to heavy metal head shop gal, to moderating freight brokerage in the span of two months. Hell of a detour…

Of course now that I’m out of full-time work in the field I sold my credit score to break into, the guilt of having left a career I soured on to break into a field I didn’t need to go to college at all for is… crushing. And new beginnings, with wages to match, are hard no matter who you are.

However, this shame and heaviness is all coming from the inside. My parents are proud, my friends are happy for me, and I have yet to hear anyone actively dumping on my decision to purposely exit the salaried copywriting field. And even if everyone sucked about my choice, it wouldn’t change the fact that so far it’s the best one. At some point, you gotta shake yourself by the shoulders, borrow from Mrs. Knowles-Carter, and scream: Suck on my job cause, I’ve had enough.

Why deal with a stigma when you could deal with stigmata, right? Those are way cooler. And I’m pretty done with wounding myself either way.

Multiple small, panicked hiatuses taught me something. Some things. First thing: truly powerful screaming comes from the belly, not the throat. Most relevant thing: I don’t want to write for other people, nor for brands that can’t use some variant of my own voice.

I thought I was a copywriting mimic octopus who could change colors, shapes, and textures to suit an environment, but this whole time I’ve been a chameleon— always keeping my funky fresh shape, and only changing colors to suit how I feel, or to attract mates.

I’m not going to act like career pauses are some great thing in which to discover yourself and do some eat, pray, love BS. I quite literally almost died of a bad infection during a time I was on a pause with no heath insurance. The pauses were financially and mentally draining, and if it weren’t for extreme strokes of good fortune in several places, I wouldn’t be in a position to write this piece.

What I will say is that I was able to bid the misshapen phoenix cycle that I was on a frantic farewell, at least I think so. Anything’s liable to change, such is life.

For now, there is only to bag up the ashes and try to use them in fertilizing my next steps.

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Op/Ed

Love can turn your passion into a successful business

[EDITORIAL] You don’t always have to turn your passion into a business, but if you do, love can improve your chances of success.

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love heart light

When it comes to finding your career path (whether you are a business owner, FTE, or budding entrepreneur), recent and current generations have been beat over the head with the advice to follow their passion. The idea of this is great – it makes sense that you want your work to be aligned with what you are interested in.

The challenge is that we are typically passionate about our hobbies and while sometimes those perfectly line up with a career (cake decorating leads to owning a bakery, horseback riding leads to teaching lessons to kids with disabilities, reading leads to being a librarian), there are times that it is OK to separate your interests and hobbies from work. The real question is how to identify where you are in life and how this lines up with your professional pursuits.

You may be in a place where you need to absorb all you can from formal education. You may need to work at a job on a product that you have no interest in, but are able to see how that company thrives and excels. You may launch a new product that you felt was needed in the world, only to learn that consumers didn’t feel the same.

Money makes the world go round… but love? Love makes it all worth it.

Once we accept that we are all on a human journey, we can assess where we are in that moment, and figure out how our work and personal lives collide. I think that is when we find our purpose, and are able to accept that we don’t always know how to turn our passion into a sustainable paycheck. If you can love your family, friends, and yourself… your work can lend to providing a life for you and them that feels like a full-circle.

I do think it matters that whomever you are working for has true love for their business; you need to find true love in your role or in what you are promoting if you are a business owner. If not, I think there’s a shelf life to what you’re doing that will show itself eventually. And that’s actually OK – every step is progress towards a life full of love and business.

Resource that can be helpful: Designing Your Life Workbook: A Framework for Building a Life You Can Thrive In

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