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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

10 small things you can do for your business while Netflixing

We know the holidays are a time to relax, but before normal working hours have returned, you can still do things for your business in between episodes on Netflix. Here’s 10 simple things that won’t cut into your holiday.

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For many real estate agents, the holidays can slow business down. It’s time for some #ProductivityAndChill.

Instead of spending all day binge-watching Hulu or Netflix, in between every episode take 10 to 15 minutes to do something for your business. Here are some great ideas for things that don’t take long, but provide some long-lasting benefits.

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Productivity and chill

1. Get inspired by your favorite websites. Where do you like to shop or get your news information? Browse through their site with one purpose in mind, to see why it draws you in and how you can implement their methods into your own business.

2. Catch up on the news. Read some articles here or at The American Genius that you might have overlooked or passed by because you thought they didn’t pertain to you. Keeping up with various industries can benefit you.

3. Use your social media tools to set up posts on Twitter or Facebook.

4. Improve your webpages by writing new product descriptions or to optimize images for SEO.

5. Go through the App Store to find new apps which can help make your life easier.

6. Learn to use a new social media platform to reach out to new customers.

7. Go through your social media feed. See what people are talking about and what’s trending. Make notes when you get inspiration.

8. Clean up the documents in your laptop. Organize them more effectively so you can always find what you need.

9. Clean up your email. Unsubscribe from newsletters that you don’t ever look at. Delete messages that are old. Set up folders to save information that you may need at a later date.

10. Customize your email. Set it up to pre-sort emails into different folders to allow you to work more productively when you get back to work after the New Year.

These little tasks can eat away at your time when you’re busy trying to get things done, but when you’re relaxed and just want to feel more productive, take a few minutes to do something that won’t overtask your brain, but needs to be done to keep you more organized throughout your week.

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Op/Ed

How calendars can stop your procrastination, boost productivity

(PRODUCTIVITY) As the old method of pen-to-paper planning comes back in style, see how its use can help with time management.

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My favorite part of writing for this publication, by far, is the fact that it always has me keeping my eyes and ears open for inspiration. The simplest comment from a friend can snowball into an idea that becomes beneficial to others.

Such was the case this past weekend when my best friend, Haley, stopped by to help me unpack my new house. Haley is a graduate student, pursuing a master’s in interpersonal communication, and is a much smarter version of myself.

We got to talking about what was on tap for Haley’s final semester and she told me about a workshop she’s creating for the graduate school on the topic of how using planners/calendars helps with time management. The girl has an affinity for pen-to-paper planners, and has created an organizational structure for her daily life through their use.

Naturally, I thought, “hey, sometimes I attempt to give people advice on time management and planning, let’s bounce some ideas off of each other.” Haley then gave me a rundown of the bullet points she’s planning on covering for her interactive workshop.

1) Take everything as it comes. As a new task pops up, put it down on your calendar (whether paper or electronic) so that you don’t forget to do it later.

2) With these tasks, schedule deadlines for yourself. It can be tough to be self-motivate and have tasks completed by your own assignment. However, putting them down in writing will help you stick to them.

Only work on something if you’re being productive. If you stop being productive, you should take a step back and work on something else for a while,” says Haley. “This is why my personal deadlines help because it makes me work harder but I still have my own time.”

3) Schedule out your week starting with events that you cannot change. Start by writing down your work schedule, then appointments, meetings, etc. Then schedule in tasks that have more flexibility in time.

4) After doing this, take all of these tasks and prioritize what must be completed first and assess how much time each task will take. Be sure to give yourself an appropriate amount of time for each task.

5) For bigger projects, considering breaking them down a bit. “For bigger projects I break it down into steps, normally using a concept map to understand the core aspects of my task and what needs to be accomplished within each of those to make it more digestible,” says Haley. “Once I have the pieces, I place the pieces into my weekly schedule of events I cannot change.”

All of the pieces of this puzzle come together to create a calendar that will help you juggle every aspect of your life and boost your productivity. By implementing these ideas in my own planning, it has definitely helped me to become more of a self-starter.

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Op/Ed

5 reasons teaching your kid magic could inspire them to become a Realtor

(EDITORIAL) Teaching your child could inspire their career track, perhaps even inviting them to follow in your footsteps!

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There’s nothing quite like a good magic trick. You know there must be a solution, an easy explanation, but putting your finger on exactly what sleight of hand just happened can prove difficult with a seasoned magician. If you are the magician, you know it takes a great deal of practice, confidence, and persistence to keep an audience engaged in your magical wonders.

As captivating as magical skills are, many of the same skills that make a great magician, also make for a great Realtor®!

Here are five amazing ways learning magic as a child (or adult) can actually help someone become a successful real estate professional:

1. Build confidence

To skillfully and successfully pull off any feat of magic, you must have confidence in what you’re doing. No sleight of hand or magical illusion will be effective without the confidence of the magician. By practicing magic, you are in fact, practicing and reinforcing confidence both within yourself and your audience. A confident magician will create a confident audience – an audience that believes the magician is capable of impossible illusions, magical machinations, and captivating concealments.

This same skill set can be applied to real estate. You must have confidence in your ability to find the right home for your client. The ability to foster your clients’ trust is essential, or they will likely go elsewhere because let’s face it, the competition in the real estate world is nothing short of fierce. Starting your children out early in something like magic, builds confidence and having confidence in any industry they choose to venture into is always a good thing.

2. Hone social skills

Again, look at the audience – a good magician will have an audience practically mesmerized. The audience will be so transfixed on what the magician is doing or saying, they miss the sleight of hand. A good magician can read their audience. They know what the audience expects and will deliver appropriately. Many magicians also become well-versed in the art of nonverbal communication as well; reading people’s body language and social cues are an important part of an effective magic illusion.

Not surprising, these skills are also part of being an effective salesperson. A good Realtor will know and understand their clients’ requirements for a home, their budget, and how to effectively get them to their end goal with the fewest obstacles. Interacting with an audience is much the same as interacting with clients daily; be personable, be confident, and know your stuff.

3. Develop an eye for detail

Along with improved dexterity from manipulating cards and coins, magic routines can help improve hand eye coordination, timing, reflexes, as well as develop an eye for details. As new tricks are mastered, the eye becomes more sensitive to details of the objects being used and the magician’s surroundings. The same keen eye can readily be applied to real estate.

An attention to detail can help when staging homes, gauging your clients’ reactions to their surroundings, minimizing errors on contracts, and ensuring your safety when entering a new area. Attention to details means less errors, which in turn means happier clients and more sales completed – a win-win recipe.

4. Research

One area that you may be surprised to learn that magic can help you improve upon is research. Magicians are constantly researching new tricks to add to their routines or watching other magicians perform to see if they can implement any of their gestures or tactics to their own routines. After all, we wouldn’t remember Houdini as the greatest of all time if current magicians weren’t constantly reinventing and revisiting his tricks.

In real estate, you may be researching what your fiercest competitor is doing differently that you might be able to adapt. Are they using a different marketing platform? Are they networking in a different manner? Is there something they’re doing (or not doing) that might make a difference in your sales figures? The ability to research an adapt is another great tool to have in your box of skills.

5. Self-discipline and an ability to take criticism

When you’re first learning any new hobby, you typically “practice” on your family. They give you constructive criticism and you take that criticism and use it to improve. The more you practice, the better you get. After a bit of practice, you’re ready to give another practice run. Through continually trying to improve your skills, you’re learning self-discipline as well as the ability to accept and implement constructive criticism.

These are both skills that are necessary to excel in the professional world. You must continually hone your craft if you want to continue to excel. Continuing education, professional seminars, and workshops all exist so professionals can receive criticism on what they’re currently doing and learn what they might do better to improve themselves and their business. While you’re never too old to learn, beginning to lay the foundation for these skills in your youth with a simple hobby like magic, could be giving you more than just a way to entertain friends and family.

The takeaway:

Magic isn’t just for children; it’s never too late to have another hobby. If you’ve never dabbled in magic before, you might find you really enjoy it. If nothing else, you may find that magic teaches you and/or your children some patience, coordination, or at least a few good laughs. If magic teaches you nothing else, remember what Rumpelstiltskin said, “all magic comes with a price” and so does real estate – so hone your skills with some magical fun; you never know when it’ll come in handy!

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