If I might say so myself I pretty much decimated the arguments for pocket listings about a year and a half ago. In fact, for once I’m actually in agreement with the majority of real estate agents – most oppose selling homes “not on the MLS”. All you have to do is google the term “pocket listings” and you’ll see that the number of articles against the idea far outweigh the articles that support the concept. And if you ever read the comments section of articles on this topic you will see that more agents weigh in against the idea also.
What’s odd though is that we continue to see some agents actively engaging in this practice – especially in this time of extremely low home inventory levels. In addition, Web sites have popped up to aggregate these listings, which is quite ironic. As I said previously: “they created an MLS that’s not an MLS for listings that don’t want to be on the MLS.” Ooooooo Kayyyyyy.
A local Web site popped up a few months ago called OffMLS but I’m skeptical that it will gain much traction, though over 150 Chicago agents have already joined. I think the site with the most traction in this space is the Top Agent Network, which positions itself for non-MLS and pre-MLS listings. They emphasize the latter, but both are actually pocket listings.
Between it’s supposed value proposition and it’s actual behavior it’s a very strange, tenuous concept at best. I’ve actually resisted joining until now. I joined yesterday so that I could get better insights for this post. But the best insights into how they are positioning themselves actually come from their FAQs page and their Myths and Facts page. I could spend the rest of the day responding to their claims but here are a few of the highlights.
They restrict membership to the top 10% of agents “because the top 10% agents do the “bulk of the business” (typically the top 10% are involved in 3 out of every 4 closed sales in their market)” and that’s where the “magic happens”. Then they go on to babble something about how their site works best when they have the “optimal number” of agents and “mutual respect among the agents” and the “volume of high quality information on the network.” Interestingly, they never actually say that restricting their membership provides these benefits or how they determined that it provides these benefits. It’s a string of non-sequiturs.
Also, what is interesting is that before I was even a member I was getting inundated with their emails from agents – mostly looking to find places for buyers. So what happened to that whole exclusivity concept?
Ensures That Properties Get Broad Exposure, Leading To Smoother Transactions And Better Prices
According to the site “The vast majority of motivated and qualified buyers in the area see the property, setting up conditions for competitive pricing at or above market value….Broadly exposed Pre-MLS and Non-MLS listings are NOT to be confused with pocket listings that are “pocketed” or hidden away from other agents.” Uhhh…broad exposure…that’s what the MLS does. This is a mini version of the MLS. How does a mini version provide broad exposure? And if the membership is restricted then aren’t they hiding the listing from those restricted members? It makes no sense.
Helps Price The Seller’s Listing Before It Goes On The MLS
They talk about this in a few different places on their Web site and claim that this is “crucial to the seller’s ability to get top dollar”. The problem is that I can’t even imagine the mechanism by which this works. Maybe one agent calls you about your pre-listing. Maybe they see it or maybe they don’t. And if they tell you it’s overpriced you’re supposed to believe them? And are they going to tell you if they think it’s underpriced?
Trying to get pricing feedback from an extremely small subset of the entire market is a losing strategy. The right way to do it is get it on the MLS and expose it to the broadest possible audience. Within one week (even a few days) there are statistics available to us that give us a darn good idea of how the buyers think it’s priced – not agents. If it’s too high we can always lower the price and if it’s too low then we can negotiate harder.
And don’t realtors put their listings on this site in the hopes of actually selling it before it hits the MLS, not just get pricing information?
Maintain The Listing’s Momentum While You Get The Photos, Staging And Landscaping Ready
Elsewhere on the site they claim that agents will be putting offers together on your property for their buyers while you are getting it ready for the market. But I would NEVER present a property to even a small segment of the market until the photos, staging, and landscaping were ready. You absolutely have to put your best foot forward out of the gate. And before you put a listing on the market there IS NO momentum so there is no momentum to maintain.
Pre-MLS Listings Appear To Stay On The Site Even After They Hit The MLS
They don’t really talk about how the pre-MLS listings stay on the site after they hit the MLS but this definitely appears to be the case. I found this very strange indeed. So now the site has SOME of the MLS listings on it. What’s the point?
Buyers Ready To Make An Offer Will Hold Off While Waiting For Your Listing
That’s quite a stretch and a really bad idea for a buyer. If they found something they like they better move on it ASAP. And there is a continual pipeline of buyers ready to make an offer moving through the system. All you would be doing is reaching out to an earlier cohort of these people. There’s another one right behind them.
Like I said earlier, they go on and on with some pretty tenuous claims about the so-called benefits of their site but the fundamental problem with pocket listings is that you don’t get good price discovery in a small subset of the market. What are the odds that the most interested buyers are within 10% of the population? About 10%. That’s just not good for sellers.
On the other hand a lack of good price discovery can be great for buyers. Every buyer wants to find properties that aren’t on the market so that they can steal them. Professional investors try to do this all the time. I’ve been approached by numerous investors who want the inside track on our upcoming listings and I know from experience that they want to lowball the hell out of their offers. We just tell them we’ll call them when it hits the market. And they never buy then.
#RealEstate #PocketListings #NotOnMLS
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