In the past 6+ years I've written at least half a dozen posts about the evils of pocket listings - listings that are "coming soon" or otherwise "off market" and either temporarily or permanently not on the MLS. Despite the fact that a majority of real estate agents don't like pocket listings the National Association of Realtors hasn't done much about them - although the Chicago area MLS did create their own private listing network to compete with the other private listing networks out there and I can only assume that other MLSs did so as well.
But that all changed yesterday. I guess the NAR finally felt threatened enough that they decided they had to do something. You see, if more and more listings go off the MLS then the network value of the MLS goes down and its very existence is at risk. So, in September they came out with their Clear Cooperation Policy proposal which has been gradually working its way towards becoming formal policy:
Within one (1) business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants. Public marketing includes, but is not limited to, flyers displayed in windows yard signs, digital marketing on public facing websites, brokerage website displays (including IDX and VOW), digital communications marketing (email blasts), multi-brokerage listing sharing networks, and applications available to the general public.
Just to clarify..."public marketing" also includes marketing through those private listing networks that only some Realtors subscribe to. In other words, you really can't advertise a pocket listing anymore because doing so means you have to put it on the MLS which means it wouldn't be a pocket listing. So this kinda destroys all those private listing networks if I'm reading this right. But those networks didn't make sense to begin with since what's the point of having a super secret MLS that's off the MLS that isn't really that super secret to begin with? Well, the real point was merely to allow real estate agents to ostensibly sell access to an exclusive club.
Nevertheless, plenty of home buyers and sellers drank that cool aid anyway and paid higher commissions for the privilege of using a less efficient system. Now that the NAR has cracked down on this practice what will the purveyors of this silliness do next? Maybe they'll bring back the old MLS books.
The proposal has been winding its way through the NAR's various policy making procedures and finally received approval by the 800 member board of directors of the NAR yesterday. And the vote was 729 to 70, which tells you just how fed up Realtors were with this insane practice. The policy must be implemented by May 1 of next year, though it becomes effective on the 1st of the year.
Now, the stated motivation for this initiative is to protect the consumer - and it does - but let's face it the real goal is to protect the MLS, which is also a good goal since everyone benefits from a centralized data source of all homes for sale.
How Does This Impact Commercial Listings?
If you want to see what a real estate market looks like without an MLS and lots of pocket listings look no further than the commercial real estate business. It's a nightmare. Although commercial real estate agents can put their listings on the MLS few do for reasons I have never understood. So the commercial real estate business is the wild wild west of real estate and pretty damn inefficient.
In fact, most commercial real estate agents are not even Realtors, which may partially explain why their listings are not on the MLS. You see...only Realtors can access the MLS. And what's the difference between a real estate agent and a Realtor? Well in order to be a Realtor (member of the National Association of Realtors) you have to pay annual dues at all levels of the organization (national, state, and local) and agree to adhere to their code of conduct and disciplinary procedures.
So this new Clear Cooperation Policy would not apply to all the commercial real estate agents that are not Realtors since they don't fall under the NAR's purview. However, the NAR actually went a step further and exempted commercial listings from this policy anyway.
I can't wait to see what the reaction to this new policy is going to be from all the brokerages/ agents that try to sell pocket listing snake oil and from the private listing networks themselves. Some relatively new brokerages, which shall remain nameless but are heavily backed by venture capitalists and have been buying agents from other firms, have made pocket listings a cornerstone of their strategy so as to force buyers onto their own Web site. So the reaction to this move should be interesting.
#PocketListings #ComingSoon #OffMarketListings #PrivateListings #RealEstateAgents
Gary Lucido is the President of Lucid Realty, the Chicago area's full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider's view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.