ROCKVILLE, Md. – The multiple listing service used by Delaware real estate agents recently announced that it approved a change to now require listing before marketing.
Bright MLS, the nation’s largest MLS representing 95,000 real estate professionals in the Mid-Atlantic, approved the change Oct. 16, with fines for non-compliance beginning Dec. 1.
The change comes as “pocket” or off-MLS listings, which includes properties that are shopped to prospective buyers without being entered into the MLS, have become more common in the marketplace – due in no small part to the growth of the internet as a means to reach buyers directly.
[caption id="attachment_170294" align="alignright" width="411"] Courtesy of AAG[/caption]
Pocket listings aren’t new, and anyone who has received an email from a brokerage touting the amenities of an “exclusive” listing may have been looking at just such a property. While they may not be found on an MLS, brokerages are pushing these properties through their own resources for a sale, typically through social media, email and websites.
One draw for pocket listings is that they don’t track days on the market for a property, which can help boost an asking price for an owner that isn’t motivated to sell quickly. Properties that have been on the market for long periods of time are often seen as less appealing, potentially leading to lower bids from prospective buyers.
Under Bright’s new rule, however, agents must enter a property into the MLS within one business day of it being publicly advertised. The change does not impact an agent’s ability to privately discuss a property one-on-one, but applies to any external marketing efforts, including everything from social media postings down to yard signs.
The pocket listing prohibition applies only to properties listed for sale within Bright’s service area, which spans 40,000 square miles in Delaware, Maryland, New Jersey, Pennsylvania, Virginia, Washington D.C. and West Virginia. Nationally, the National Association of Realtors is reportedly mulling taking a similar action against pocket listings.
Chris Finnegan, Bright vice president of marketing and communications, said that the new policy ensures that consumers have access to information, that professionals have a fair playing field and that there is transparency in the transaction. The use of an MLS also helps to ensure that the tenets of the federal Fair Housing Act of 1968, which prohibits discrimination in the sale of a property due to race, color, religion, sex, handicap, familial status, or national origin, are upheld, he said.
“The pocket listing itself is, by design, exclusionary,” he said. “Our model is that we’re open for everyone.”
Private or office-exclusive listings – which may include wealthy sellers, celebrities, or those contending with domestic issues, among other examples – can continue to be held off the MLS if they submit a required waiver request, but they cannot be publicly marketed.
“Coming soon” or pre-market listings are similarly unaffected by the policy but are limited to those homes preparing for market within 21 days and are prohibited from holding showings. Once ready for sale, they would be covered by the new policy.
Beau Zebley, president of the Delaware Association of Realtors, welcomed the Bright policy change, noting that he’s seen the growing influence of social media in marketing that can cause a disadvantage for consumers.
“There are agents who have been putting listings on social media, websites and even signs in the yard – everywhere but the MLS,” he said from Las Vegas, where he was attending the Zillow Unlock conference. “We have such a low inventory in Delaware and the Bright MLS region at large that you could advertise a home on social media and potentially have a sale within a few days.”
That situation typically benefits only the agent, however, as it creates the potential for a double-sided sale, also known as double agency, Zebley said. Although a client must approve an agent’s ability to represent both a seller and buyer, a client often believes they should trust the professional’s opinion, he explained.
“You can be completely legal, and still run afoul of the ethical code,” Zebley said, referring to the code sworn to by Realtors that advises careful consideration in such scenarios.
Realtor Michael Kelczewski, of Brandywine Fine Properties Sotheby's International Realty in Wilmington, said that he sees the Bright policy change as its way to combat the exploitation of its waiver process in a growing use of Zillow’s “coming soon” feature, which doesn’t have the same restrictions on showings as its own version, and other online avenues.
Kelczewski said that he had a client last year who spotted a “coming soon” property on Zillow and asked him to inquire about it. When he did, he found out that the seller was already planning a showing and had a handful of motivated buyers on the hook.
“The spirit of the MLS is to provide an even playing field, so I think it’s good to try to close the loophole,” he said. “In my opinion, you want to maximize exposure for a seller. With pocket listings, typically the agents are attempting to benefit themselves by also representing the buyer.”
Sharon Slevin, a Long and Foster Realtor based in Bethany Beach, said that she also found the new policy acceptable, but noted she had rarely encountered pocket listings in her work at the Delaware beaches.
“Sometimes in a neighborhood, you may have an owner who may want to see if the neighbors want to purchase a home first,” she said. “But I personally think that would put them at a disadvantage.”
When considering one of the draws to pocket listings – the lack of tracked days on market – Slevin said that didn’t have much on an impact on her market, which is largely filled with secondary vacation homes or investment properties.
“There’s no urgency to sell it quickly because they don’t have to move,” she said, noting it’s common for a home to sit on the market for weeks or months before a sale. “If it is priced right, however, it won’t last that long.”
As Bright has received feedback on the new policy, with many concerned about it affects the “coming soon” status, Finnegan said that the MLS understands there will be an initial learning curve.
Enforcement of the new policy will begin with a warning although subsequent violations would result in fines of $5,000 for first instance, and rising to $7,500 and then $10,000, respectively, in additional violations. That mechanism would be partly self-enforced through reporting by participating agents as well as reviews by Bright staff, Finnegan said.
“We recognize that these changes are big changes, and we don’t see this as cash cow,” he said, encouraging agents to reach out to Bright with questions about potential scenarios. “We want to deter behavior and not issue fines. We’d be ecstatic if we never had to issue one fine.”