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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.

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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

A negotiation strategy successful people always use

(OP/ED) Successful people didn’t wake up one day in a leadership role, they used this negotiation strategy every day to win.

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One of my earliest lessons in the art of negotiation went down at home, as the youngest child trying to get the one up on my older brother. It was the mid 90s, Pepsi was rewarding loyal customers with Pepsi Points hidden in their 24-packs. I don’t think either of us knew what the hell we would even do with the Pepsi Points, but we both knew we wanted them. So for hours we negotiated.

There was yelling. There was name calling. Finally, my dad came in with a pair of garden scissors and proceeded to cut the Pepsi Points voucher in half. We were speechless. Our dreams of amassing a wealth of Pepsi Points turned into a lose-lose scenario.

Sadly, our negotiation experiences today end up following a similar pattern. Long, energy draining negotiations end in lose-lose scenarios. My own pattern of negotiations gone wrong only began to change when I became a community mediator in college. I learned from leaders in business, law, and social work negotiation skills that have helped me in both my professional and personal life.

A good starting point to any negotiation scenario is understanding negotiation motivators. Some of the obvious motivators are money and resources. These obvious motivators are at the tip of the iceberg. In negotiations, these motivators are often written or verbally communicated. However, there can be a handful of other motivators hiding beneath the surface. These motivators represent the hidden, yet powerful underside of the iceberg.

Here are some common hidden motivators to keep in mind: respect, accountability, safety, and power.

Seeking clarity involves slowing down the negotiations and proactively checking in with the other party to ensure you’re understanding points of agreement or disagreement correctly.

Often, this looks like simply taking time in the negotiations to summarize progress. For instance, negotiating with the head of another department about the use of meeting rooms. A summarizing statement on when and why each party needs the meeting rooms can be critical in correcting assumptions earlier on rather than later. It also helps ensure objectivity.

I’ll be totally honest and admit to times when I’ve been tempted to turn negotiations personal. In my head I’ve said things like, “Sally wants the meeting rooms all to herself” or “accounting is always trying to hold me back.”

Seeking clarity by summarizing key points helps keep us grounded in reality, and ensures that we are working towards each side’s true needs rather than the needs we assume in our heads.

We hear this term in sales pitches, business seminars and relationship workshops. But how can we create win-wins the midst of negotiations that are often stressful and complex? Well, let’s break down the win for both sides.

First, we create the win for ourselves by coming into our negotiation meetings with a clear picture of what our goals are both long and short-term.

In negotiating a purchase, I may want monetary savings now, but in the long term I’m willing to pay more if a product can meet my long term goals of reliability and convenience.

Ensuring a winning scenario for those on the other side of the negotiation table involves creating buy-in. This doesn’t mean stating your solutions and getting the other party to begrudgingly agree. It’s about asking open-ended questions and giving the other side a chance to craft their ideal solution. Sometimes, simply asking the other party what their ideal solution looks like can give you a head start in reaching a mutually beneficial scenario.

The most important step in creating a win-win scenario is to embrace creativity. Click To Tweet

We do this by focusing not just on WHAT the needs are, but HOW those needs are met. Think outside the box. For instance, what are some non-traditional ways of structuring payments? What are some non-traditional employee benefits? What are some non-traditional services you can add to a contract?

Negotiating is one of life’s necessities. Unless you live in your own self-sustaining plastic bubble, eventually you’ll need to practice the art of effective negotiation.

Don’t be like my Pepsi Point obsessed eight-year-old self, slipping into a lose-lose scenario due to lousy negotiation skills.

Practice seeing the other side of the iceberg, seeking clarity, and embracing creativity. These three negotiation skills can quickly turn a lose-lose scenario into a mutually beneficial one for both parties.

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Op/Ed

The music you’re listening to may dictate your productivity levels

(EDITORIAL) Whether it’s a podcast, news, or music, most people are listening to *something* while at work – so what makes you the most productive?

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For some, productivity requires a state of concentration that can only be achieved in silence. But workplaces are seldom so quiet, and truth be told, most of us prefer to have some background music playing while we work. Some people swear they can’t work or study without it.

Personally, I find music helpful for encouraging productivity and creativity. It distracts the part of my brain that would normally be chattering away – the voice in my head worrying, wondering, and daydreaming. I find that music neutralizes this inner voice, freeing up my brain to focus on the task at hand.

More and more research backs up what many of us experience – a state of enhanced calm, focus, and creativity when we listen to music while working. Deep Patel at Entrepreneur.com has a list of the best types of music to serve as the soundtrack to your workday.

Typically, music without lyrics is best for working or studying, since lyrics tend to catch our attention. Research has so consistently shown classical music to boost productivity that the phenomenon has it’s own name – the Mozart effect.

But other forms of wordless music can work as well. Patel recommends cinematic music for making the daily grind feel as “grandiose” as a Hollywood epic. Meanwhile, video game music has been specially designed to help gamers concentrate on game challenges; likewise, it can help keep your office atmosphere energized. Soothing nature sounds, such as flowing water or rainfall, can also help promote a calm but focused state.

Music with lyrics is okay too, as long as it doesn’t turn your office into a karaoke bar. Cognitive behavioral therapist Dr. Emma Gray worked with Spotify to identify the characteristics of music that can actually change our brain waves. She found that music between 50 and 80 beats per minute can trigger the brain an “alpha” state that is associated with relaxation and with being struck with inspiration.

Really, any music will do, as long as you like it. Research from the music therapy department at the University of Miami found that workers who listened to their preferred artists and genres had better ideas and finished their tasks more quickly.

What styles of music help you focus during your workday? I myself enjoy the collection of “lo-fi” or “chill-hop” playlists on YouTube. This music has a consistent beat that is engaging without being distracting, and the accompanying video generally features an adorable cartoon character to keep you company.

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Op/Ed

Is anyone NOT a social media influencer today?

(EDITORIAL) Is there a human alive today that doesn’t feel the pressure to be some sort of influencer, be it for personal or business reasons? I’m not sure.

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Is it just me, or does it seem like everybody and their brother (or dog) is now some sort of influencer? Don’t get me wrong, I am all about sharing ideas with others and, with that, blogging also brings a degree of creativity which I am also an advocate for.

My concern is, with all of the influencer noise out there, how do we know what we can trust?

Additionally, what criteria is needed to have a brand see you as an influencer?

I have always been curious on this subject, but it didn’t hit me over the head until I watched both Fyre Festival documentaries and thought, “okay, this influencer culture is IN-TENSE.” While watching, I thought about the people who purchased tickets to this event: had they built up a trust with the influencers spreading the word of this “experience” or were they intoxicated by the viral video of a once-in-a-lifetime-party on the beach?

A few days after watching these documentaries, a thread on Twitter caught my eye (okay, actually the gif of Catherine O’Hara on Schitt’s Creek caught my eye, but, whatever):

It was all about a New York-based influencer who built a strong following and decided that – at 23 – she was the ideal person to hold a seminar to teach people “how to live their best lives” (or some hokum like that).

Long story short, she got people to buy tickets but was in over her head and had to cancel appearances and seemingly screwed some people over and it’s the oldest story in the book.

I had never heard of this gal before and, after creeping on her social media for a little bit, I couldn’t figure out why she would be someone others would seek advice from.
This brought more curiosity to mind and begged the question of: exactly how involved is it to become an influencer? Given the vast amount of influencers who have popped up in a relatively short amount of time, I gathered it can’t be that difficult.

I’m a blogger, but never once considered myself a person of influence. However, I wanted to know what it would take for a brand to see me as such.

Without getting into the details, it didn’t take a lot and I now have a variety of products to test and review on my blog. My point is, I was surprised that my requests for sample were taken to so easily, and while I’m grateful for the opportunity and plan to write honest and in-depth reviews, I worry about others not being honest, and misleading impressionable followers.

With all of this in mind, my plea is this – follow whomever you want, like whatever posts you want, but please do your own research. Don’t be swayed by a well-filtered photo of a pretty girl sipping tummy-shrinking tea.

There is so much noise on the Internet that it is easy to get caught up in the mess of the storm, but take the time to do your own digging and spend your money and time wisely, especially when it comes to your profession.

Thank you for coming to my Taylor Talk.

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