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\u2019s not likely to stay legal for long, and those who engaged in the practice might find themselves in serious trouble. <\/p>\n
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:<\/p>\n
In all cases, the agent\u2019s 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:<\/p>\n
the agent is clearly privileging his own interests over the client\u2019s. Like referral fees and dual agency, this practice is bad for consumers.<\/p>\n
We\u2019ve already seen those \u201cin the know\u201d enact rules requiring MLS listing. In August of 2013, Fannie Mae said that it wouldn\u2019t approve short sales unless the property had had an active MLS listing for at least five straight days including a weekend<\/a>. I think that\u2019s just the start – the government is aware of the financial harm caused by not giving a listing proper exposure<\/em>. Take heed. <\/p>\n Some might ask, \u201cIs MLS entry really needed to get top dollar for a listing?\u201d Where it has been studied so far, the answer has been, \u201cYes!\u201d 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\u2019re not going to take action?<\/p>\nFinancial harm to the consumer isn’t the only issue at hand<\/h3>\n