4 ms·

Impact of Pocket Listings on Housing

16 points by caseyf7 5y ago

joezydeco 5y ago
"They grew so prevalent in some parts of the country that the National Association of Realtors (NAR) passed a policy against the practice in 2019, requiring brokers to list any property that they are marketing to potential buyers on the multiple listing service, or MLS" Right. So the realtors instead created a second listing network to "draft" listings before putting them on the MLS. What a tidy little loophole. https://chicagoagentmagazine.com/2021/04/05/mred-launches-revamped-private-listings-network/ https://chicagoagentmagazine.com/2021/04/05/mred-launches-re...
- bombcar 5y ago
  The realtor market is already a cabal-like gang so it’s not surprising they’d do that. You can’t really stop things like this without actual laws and penalties as people can just not “list”. In an era of internet access to the MLS they need to provide value - apparently by creating a secret secondary market.
  - nradov 5y ago
    There's no need for laws here. If I want to sell my old bike to a friend I'm not required to post it on Craigslist first. Real estate is no different.
    - joezydeco 5y ago
      However, if there's someone across town that wants the bike and is willing to pay more, two parties have lost out including yourself. You've left money on the table. Back to the original problem, realtors don't care about this because at 5% commission if the price is $400,000 or $420,000 the difference is miniscule. It's prioritizing velocity over price.
      - nradov 5y ago
        So what? Ultimately it's up to the seller whether or not to accept an offer or hold out for a better price.
kevinpet 5y ago
I don't know what's really going on, but I know this article is trying to mislead the reader. The headline is about pocket listings, but the only numbers mentioned related to that are > The number of homes that have likely sold without being marketed to the public has grown by 67 percent since November 2019, when the NAR adopted its stricter rules, according to a Redfin analysis tracking MLS listings that were marked “sold” or “pending” the same day they were put on the database. Was it 1% of homes and now it's 1.7%? The article is leading us to believe this is a large gain, but doesn't present any evidence showing that. "67%" is a suspicious number as well, as if someone said "about two-thirds" and it got translated back to a precise percent.
- mzs 5y ago
  "grew so prevalent in some parts of the country"
- clairity 5y ago
  also, the problem isn't pocket listings per se, but artificial demand induced by the rise-at-all-costs policies of (state and federal) governments and the cartel-like action of the MLS's, combined with long-lasting political pressure to limit housing growth. pocket listings are a tiny additional complication, like a bruise next to a bullet wound. it's nothing next to the real problems we face around real estate and housing.
- mikem170 5y ago
  The "grown by 67 percent" phrase in the main article links to another redfin article with the specific figures.
  - kevinpet 5y ago
    Thank you. For those not wanting to click through, it was 2.4% to 4.0%. I do wonder if the timeframe could be obscuring any seasonal trend, since it's measured from Nov 2019 to Mar 2021. It's strange to me that sellers put up with this. Why wouldn't you want it listed to get the best possible price?
udev 5y ago
Genuine question: why would a rational seller accept to sell before listing the house on the market (MLS) to a widest possible audience?
- xenadu02 5y ago
  Yes, this happens in SF. Some people inherited or built their house, owe nothing on it, and want to sell it onward to another family (not an investor, REIT, etc). One of our friends bought a house this way - off market. Some people also don't do offer dates so they accept the first good offer that comes along - we just bought a house in SF this way for 50k over asking. The sellers were moving across the country, had lots of equity, so their concern was getting the sale wrapped up ASAP. FWIW our realtor was also going to show us an off-market property from a friend who renovated houses. This friend is self-funded so his concern is getting a good return even before the reno is complete so he can buy the next fixer-upper. I assume this is because he can't control when those houses come up for sale so he needs to buy them when they're available. That can present cash flow and financing problems for a small operator.
- nradov 5y ago
  Some rational sellers are willing to accept a slightly lower price in order to close quickly and avoid the hassle of open houses.
- beerandt 5y ago
  Because you can only sell the house once. So given an appropriate asking price, the first acceptable offer is as good as the next 10. (If your realtor is any good, the price will be close to the true market value anyway, or priced appropriately considering trade-offs, like closing quickly.) If you can get that offer without the hassle of showing the house to a thousand strangers, and having random people stopping and peeping through your window, then why not? Another common occurrence is accepting an offer below certain known loan limits. If you know you want to get approx the local limit for a jumbo loan, then accepting a price slightly over that limit comes at the cost of fewer potential buyers, or offers that have to back out because they couldn't get financing approved. So the rational choice might be accepting the lower offer, instead of slightly higher with more hassle/risk.
mdavis6890 5y ago
It is the job and responsibility of the listing agent to serve their client's interests. Assuming that sellers know this is happening, and further assuming that this practice of pocket listings serves them, I wonder HOW it does.

16 points by caseyf7 5y ago

"They grew so prevalent in some parts of the country that the National Association of Realtors (NAR) passed a policy against the practice in 2019, requiring brokers to list any property that they are marketing to potential buyers on the multiple listing service, or MLS" Right. So the realtors instead created a second listing network to "draft" listings before putting them on the MLS. What a tidy little loophole. https://chicagoagentmagazine.com/2021/04/05/mred-launches-revamped-private-listings-network/ https://chicagoagentmagazine.com/2021/04/05/mred-launches-re...

bombcar 5y ago
The realtor market is already a cabal-like gang so it’s not surprising they’d do that. You can’t really stop things like this without actual laws and penalties as people can just not “list”. In an era of internet access to the MLS they need to provide value - apparently by creating a secret secondary market.
- nradov 5y ago
  There's no need for laws here. If I want to sell my old bike to a friend I'm not required to post it on Craigslist first. Real estate is no different.
  - joezydeco 5y ago
    However, if there's someone across town that wants the bike and is willing to pay more, two parties have lost out including yourself. You've left money on the table. Back to the original problem, realtors don't care about this because at 5% commission if the price is $400,000 or $420,000 the difference is miniscule. It's prioritizing velocity over price.
    - nradov 5y ago
      So what? Ultimately it's up to the seller whether or not to accept an offer or hold out for a better price.

kevinpet 5y ago

I don't know what's really going on, but I know this article is trying to mislead the reader. The headline is about pocket listings, but the only numbers mentioned related to that are > The number of homes that have likely sold without being marketed to the public has grown by 67 percent since November 2019, when the NAR adopted its stricter rules, according to a Redfin analysis tracking MLS listings that were marked “sold” or “pending” the same day they were put on the database. Was it 1% of homes and now it's 1.7%? The article is leading us to believe this is a large gain, but doesn't present any evidence showing that. "67%" is a suspicious number as well, as if someone said "about two-thirds" and it got translated back to a precise percent.

mzs 5y ago
"grew so prevalent in some parts of the country"
clairity 5y ago
also, the problem isn't pocket listings per se, but artificial demand induced by the rise-at-all-costs policies of (state and federal) governments and the cartel-like action of the MLS's, combined with long-lasting political pressure to limit housing growth. pocket listings are a tiny additional complication, like a bruise next to a bullet wound. it's nothing next to the real problems we face around real estate and housing.
mikem170 5y ago
The "grown by 67 percent" phrase in the main article links to another redfin article with the specific figures.
- kevinpet 5y ago
  Thank you. For those not wanting to click through, it was 2.4% to 4.0%. I do wonder if the timeframe could be obscuring any seasonal trend, since it's measured from Nov 2019 to Mar 2021. It's strange to me that sellers put up with this. Why wouldn't you want it listed to get the best possible price?

udev 5y ago

Genuine question: why would a rational seller accept to sell before listing the house on the market (MLS) to a widest possible audience?

xenadu02 5y ago
Yes, this happens in SF. Some people inherited or built their house, owe nothing on it, and want to sell it onward to another family (not an investor, REIT, etc). One of our friends bought a house this way - off market. Some people also don't do offer dates so they accept the first good offer that comes along - we just bought a house in SF this way for 50k over asking. The sellers were moving across the country, had lots of equity, so their concern was getting the sale wrapped up ASAP. FWIW our realtor was also going to show us an off-market property from a friend who renovated houses. This friend is self-funded so his concern is getting a good return even before the reno is complete so he can buy the next fixer-upper. I assume this is because he can't control when those houses come up for sale so he needs to buy them when they're available. That can present cash flow and financing problems for a small operator.
nradov 5y ago
Some rational sellers are willing to accept a slightly lower price in order to close quickly and avoid the hassle of open houses.
beerandt 5y ago
Because you can only sell the house once. So given an appropriate asking price, the first acceptable offer is as good as the next 10. (If your realtor is any good, the price will be close to the true market value anyway, or priced appropriately considering trade-offs, like closing quickly.) If you can get that offer without the hassle of showing the house to a thousand strangers, and having random people stopping and peeping through your window, then why not? Another common occurrence is accepting an offer below certain known loan limits. If you know you want to get approx the local limit for a jumbo loan, then accepting a price slightly over that limit comes at the cost of fewer potential buyers, or offers that have to back out because they couldn't get financing approved. So the rational choice might be accepting the lower offer, instead of slightly higher with more hassle/risk.

mdavis6890 5y ago

It is the job and responsibility of the listing agent to serve their client's interests. Assuming that sellers know this is happening, and further assuming that this practice of pocket listings serves them, I wonder HOW it does.