HOUSINGNEWSREPORT
LEAD A RT I C LE
The Off-Market Housing Market BY PETER MILLER, STAFF WRITER
There’s a strange omission from the long list of industries vanquished, disrupted, and dismantled by the Internet. Retail chains are closing, cabs are not being hailed, and hotel rooms are going empty.
But amid the rumble and ruin of
That isn’t stopping would-be MLS
digital marketing to show homes
disrupters like REX Real Estate
directly to potential homebuyers,”
from trying.
explains Ari Sternberg, VP of Digital Marketing at REX, in a blog post. “We
“REX homes are not on the MLS and
target buyers based on their geography,
never will be,” says the company, which
demographics, preferences, and even
is active in Southern California and New
online behaviors.”
York’s Long Island. “We advertise directly to buyers on the Internet, not to brokers.
One by-product of working outside
REX homes are on Google, Zillow, Trulia,
the MLS system is that REX has a
Yahoo and other places buyers search.”
different approach to commissions.
traditional commerce, multiple listing
The company says that “on average,
services (MLS) remain remarkably
“Instead of using the MLS to advertise
impervious to disruption.
homes to agents, we use sophisticated
thanks to our 2 percent all-in fee, REX CONTINUED ON NEXT PAGE
OCTOBER 2017 | ATTOM DATA SOLUTIONS
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T HE O FF- MARK ET H O U S I NG M A R K E T
SHARE OF OFF-MLS SINGLE FAMILY HOME SALES IN 2016 MARICOPA COUNTY, ARIZONA (PHOENIX)
24.9%
ORANGE COUNTY, CALIFORNIA
18.7%
DALLAS COUNTY, TEXAS LOS ANGELES COUNTY, CALIFORNIA
14.0%
8.1%
Off-market sales are calculated by comparing counts of publicly recorded sales deeds with counts of MLS closed sales in each market. Sources: ATTOM Data Solutions, First Team Real Estate, ARMLS, Texas A&M Real Estate Center.
monopoly and the result would be more
“The MLS is an antiquated tool created by real estate brokers to keep buyers dependent on them. But the Internet changed all that.”
competition, lower fees, fewer brokers, and more self-selling. The broker at the center of the real estate transaction would be displaced by the free and fluid flow of information and maybe a few
R E X REAL ESTATE O N I TS WEB SI TE
hours of legal time. “The broker is out of a job as he knows
Sellers have netted $25,000 more on
“The MLS is an antiquated tool created
it,” said MSN Real Estate Forum Manager
their home sale than they would have
by real estate brokers to keep buyers
Gary Brown in a 1995 interview with
if they paid traditional agent fees of 6
dependent on them,” according to REX.
Frank Cook’s Real Estate Intelligence
percent. Of course, the exact savings
“But the Internet changed all that.”
Report. “There will still be a need for some broker services, but brokers will
depends on the list price of the home. But in all cases, the REX fee is 80
Not Dead Yet
be out of the matching process and
percent less than traditional agent
The MLS has survived previous
some of the peripheral services. Brokers
commissions, which usually total 5 to
declarations of its demise.
may be go-betweens and help in negotiations. They may fill out forms.”
6 percent. There are no other fees beyond the 2 percent.”
When the Internet began to gain farflung acceptability in the early 1990s
If such predictions were true we
Plainly there is public demand for
it was widely believed that real estate
should now see a marketplace filled
something different. A study by Trulia
brokers would be an instant casualty.
with broker-less transactions, those
published this summer found that
Through MLS systems the brokerage
selling for-sale-by-owner, so-called
“44 percent of Americans have a
community had a lock on real estate
FSBOs. In fact, precisely the opposite
regret about their current home or
data, the core information needed
has happened. Self-sellers are a
the process they went through” when
to market homes. Many believed the
vanishing species.
choosing it.
Internet was going to end the MLS
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TH E OFF- MARK ET H O U S I NG M A R K E T
MLS SHARE OF SINGLE FAMILY SALES IN LOS ANGELES COUNTY PUBLICLY RECORDED DEED SALES
MLS SALES COUNTS
MLS SHARE OF SALES
70,000
96% 94%
93%
94%
60,000
91%
90%
90%
90%
92% 92%
50,000
86% 90%
40,000
88% 86%
30,000 87%
84%
84%
20,000
82% 10,000
80% 78%
0 2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
SOURCE: FIRST TEAM REAL ESTATE, ATTOM DATA SOLUTIONS
According to the 2016 edition of the National Association of Realtors (NAR) Profile of Home Buyers and Sellers, “only eight percent of recent home sales were FSBO sales again this year. For the second year, this is the lowest share recorded since this report
“Only eight percent of recent home sales were FSBO sales again this year. For the second year, this is the lowest share recorded since this report started in 1981.” N ATI O N A L A S S O CI AT I O N O F RE A LT O RS PROFIL E OF H OME B U YE R S A ND SE L L E R S
started in 1981.” Grassroots Disruption But the picture is markedly different
deed data and MLS data provided
numbers when it came to share of sales
at the local level in markets where
by First Team Real Estate, the largest
not on the MLS. The number of non-
MLS disrupters like REX and others
independent brokerage in California.
MLS listed sales were much higher in
are operating.
That indicated about 11 percent of all
Orange County at 19 percent than in
single family sales in the region were
Los Angeles County at just 8 percent
Single family home sales listed on the
not listed on the MLS, down from 13
— on par with the national average
MLS represented 89 percent of single
percent in 2015 but up from a low of 8
provided by NAR for 2016.
family home sales deeds recorded
percent in 2008. The disparity between the two counties
in Los Angeles and Orange counties combined, according to an ATTOM
But each of the two Southern California
Data Solutions analysis of public record
counties had substantially different
boils down to “the lack of listing CONTINUED ON NEXT PAGE
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T HE O FF- MARK ET H O U S I NG M A R K E T
inventory in Orange County,” according
Mahon believes most off-MLS sales
entertain an offer that they feel is fair for
to Michael Mahon, president at First
are the result of these so-called
the asking price they are wanting to get
Team Real Estate. “Because listings have
pocket listings.
for the property … a ready, willing and
been down for 2016, you have a lot of
able buyer in queue is very appealing.”
agents who through their own sphere of
“We have agents who have 50 to 75
influence … they already have ready and
buyers sitting there as pent-up demand
Off-Market in Middle America
willing buyers so they never make it to
waiting for listings,” he said. “A lot
The share of off-MLS sales were also
the MLS.”
of these home sellers are willing to
much higher than the national average across the country in Dallas and Phoenix.
“We have agents who have 50 to 75 buyers sitting there as pent-up demand waiting for listings. A lot of these home sellers are willing to entertain an offer that they feel is fair for the asking price they are wanting to get for the property … a ready, willing and able buyer in queue is very appealing.”
An ATTOM Data Solutions analysis of MLS closed sales counts provided by the Texas A&M Real Estate Center and public record closed sales counts in Dallas County, Texas, shows MLSclosed sales of single family homes in 2016 represented 86 percent of single family home sales recorded with the
MICHA EL M AH O N
county for the year — indicating about
P R E SIDENT, FIRST T EA M REA L ESTAT E, SO U T HE R N C A L I FOR NI A
14 percent of all sales were not on CONTINUED ON NEXT PAGE
MLS SHARE OF SINGLE FAMILY SALES IN ORANGE COUNTY, CA PUBLICLY RECORDED DEED SALES
MLS SALES COUNTS
MLS SHARE OF SALES
89%
30,000
90%
88% 87%
87% 25,000
88% 86%
84% 83%
84%
20,000
82% 81%
15,000
10,000
80%
80%
80% 78% 76%
76% 74% 72%
5,000
70% 0
68% 2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
SOURCE: FIRST TEAM REAL ESTATE, ATTOM DATA SOLUTIONS
OCTOBER 2017 | ATTOM DATA SOLUTIONS
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T HE O FF- MARK ET H O U S I NG M A R K E T
ML S SHARE OF SINGLE FAMILY HOME SALES IN MARICOPA COUNTY, AZ (PHOENIX)
MARICOPA COUNTY (PHOENIX) i BUYERS
PUBLICLY RECORDED DEED SALES MLS SALES COUNTS
OFFERPAD
MLS SHARE OF SALES 75.1%
700 600
87,206
83,476
OPENDOOR
500
500 61,689
65,503
73.9%
400
424 102
300
280
200 100
150
0 2015
2014
2016
2015
2016
YTD 2017
SOURCE: ARMLS, ATTOM DATA SOLUTIONS
the MLS. The analysis excluded non-
year were from owners to homebuying
All Opendoor-related entities identified
arms length sales such as intra-family
companies that purchase directly from
in the public record data analysis
transfers and transfers to lenders via
homeowners that have not listed their
cumulatively purchased 500 single
the foreclosure process from the public
homes for sale on the MLS. In the
family homes in Maricopa County in
record counts.
past those companies utilized offline
2016, accounting for about 1 percent
methods to attract sellers. The yellow
of all 72,145 existing single family
In Maricopa County, Arizona, home to
“We buy ugly homes” signs are a prime
home sales in the county during the
the city of Phoenix, MLS-closed sales of
example of these offline methods. Now,
year. The 500 purchased by Opendoor
single family homes represented just
however, there is a case to be made that
entities in 2016 was up 18 percent
75 percent of the single family home
direct transactions with homebuying
from 424 purchased in 2015 and up
sales recorded with the county for 2016,
companies might increase with the
82 percent from just six single family
up slightly from 74 percent in 2015,
introduction of newer firms such as
home purchases in Maricopa County
according to an ATTOM analysis —
Opendoor and Offerpad that attract
in 2014.
indicating about one in four sales in that
sellers largely utilizing online methods.
county is not listed on the MLS.
Year-to-date in 2017, Opendoor An Opendoor entity (OD ARIZONA M
entities have purchased 102 single
What do Dallas and Phoenix have in
LLC) was the second-biggest buyer of
family homes in Maricopa County,
common? They are both testing grounds
existing single family homes in Maricopa
indicating it may be slowing its
for a quickly growing alternative to
County in 2016, with 181, second
acquisitions in that market. Meanwhile,
listings for sale on the MLS: iBuyers
only to a Blackstone-backed Invitation
fellow iBuyer Offerpad is continuing to
such as Opendoor and Offerpad.
Homes entity (IH6 PROPERTY PHOENIX
ramp up its acquisitions in Maricopa
LP), which purchased 233 single family
County, with 280 year-to-date in 2017,
Disrupter De Jour: iBuyers
homes during the year, according to an
up from 150 for all of 2016 and just
NAR figures for 2016 estimate about
ATTOM Data Solutions analysis of public
eight for all of 2015.
1 percent of home sales during the
record data.
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T HE O FF- MARK ET H O U S I NG M A R K E T
An Opendoor entity (OD TEXAS D LLC)
A Closer Look at Opendoor
the equity and credit markets for
was the second biggest purchaser
Opendoor is important for several
additional funding.
of existing single family homes in
reasons: Second, Opendoor is an MLS-member
Dallas County so far in 2017 with 117 purchases — behind an entity affiliated
First, it has been able to assemble $320
brokerage as well as a direct buyer and
with longtime direct buyer NetWorth
million in equity and more than $500
seller. This model is well-established
Realty (DALLAS METRO HOLDINGS LLC),
million in debt financing. Such numbers
in the real estate field: think of inter-
which had 130 purchases. The combined
instantly make Opendoor a notable
generational family firms that buy and
purchases of all Opendoor-affiliated
player in the local real estate markets
sell properties as well as brokers who
entities was 132 so far in 2017, up from
where it is active. Moreover, if it finds
buy and sell for their own accounts.
97 in all of 2016 and none in 2015.
success, it will be able to go back to
“The Opendoor difference is simplicity, convenience and certainty,” said Evan Moore, Opendoor’s head of agent
“For sellers, Opendoor makes it easy for homeowners to receive a fair market value offer in a few clicks, eliminating the hassle of home showings and months of uncertainty and giving them the power to close on their timeline.”
experience. “For sellers, Opendoor makes it easy for homeowners to receive a fair market value offer in a few clicks, eliminating the hassle of home showings and months of uncertainty and giving them the power to close on their timeline. For buyers, Opendoor also
EVAN M O O R E
provides the ultimate in convenience
H E AD OF A GENT EXPERIENC E, O PEN DOOR
by providing on-demand access to CONTINUED ON NEXT PAGE
MLS SHARE OF SINGLE FAMILY HOME SALES IN DALLAS COUNTY
DALLAS COUNTY iBUYERS
PUBLICLY RECORDED DEED SALES MLS SALES
OPENDOOR
MLS SHARE 140
86.3%
132
120 29,462
28,367 24,488
100 25,341
97 80
86.0%
60 40 20 0
2015
2016
2016
YTD 2017
SOURCE: TEXAS A&M REAL ESTATE CENTER, ATTOM DATA SOLUTIONS
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T HE O FF- MARK ET H O U S I NG M A R K E T
Opendoor homes all day everyday. When buyers are ready to purchase a home, Opendoor delivers a streamlined experience, offering mortgage and title services, a home warranty and a 30-day money-back guarantee.”
“Instant Offers is designed to attract sellers before they call you. Zillow will then try to influence those sellers to list with a Zillow agent… instead of you.” STO PZ I L L O W W E BS I T E
The Opendoor model includes brokers. As an example, Moore explained that “if an agent is representing someone who needs to both sell and buy, they’ll often
capital direct sales and purchases
2017. He said most of the 9,000 homes
bring an Opendoor contract on the
will increase.
that the company’s franchisees are on
home they need to sell so they have the
track to buy this year are purchased off
selling part of the process taken care of
Old-School Off-Market Expansion
up front, giving the client control over
It’s not just disruptive startups like
their timeline, more leverage on their
Opendoor and Offerpad that are
“We buy direct from the home owner,
purchase, and a longer time to search.”
expanding off-market purchasing,
without hitting MLS,” Hicks said. “And
however.
the people we’re buying them from,
the MLS.
The company reports that more than
they don’t want a Realtor or anyone
8,500 customers have bought and sold
HomeVestors, a 21-year-old company
else traipsing through their house. …
with Opendoor since launching in 2013.
known for the “We Buy Ugly” houses
They got cats or they got smell. Those
This has been achieved in just four
signs, has exponentially expanded the
are the houses we are buying.”
markets — Atlanta, Dallas Fort-Worth,
markets it operates in since the housing
Las Vegas, and Phoenix — but the
bust, according to CEO David Hicks.
company expects to enter the Orlando
Hicks said the company’s growth stems in part from strong demand from
and Raleigh markets before the end of
Hicks said the number of HomeVestors
real estate investors wanting to buy
the year. No doubt with more markets,
franchises has grown from 165 in 2009
rental properties.
more exposure, and with substantial
to 870 in 140 cities across the country in
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T HE O FF- MARK ET H O U S I NG M A R K E T
“There is a huge interest in people
transaction — rather than to an owner-
from 941 deals totaling $88 million in
wanting to be landlords, wanting to
occupant sold through a Realtor and
2013, according to its website.
buy investment properties,” he said,
listed on the MLS.
explaining that these investors are
The basic NetWorth model is built on
hungry for inventory to buy. “And that’s
“We are selling more properties to
helping prospective real estate investors
what we’re good at. Generating the
other investors now than we were,”
find properties to purchase as rentals
leads of people who want to sell that
Hicks said. “We were selling more than
or fix-and-flip opportunities, according
ugly house that needs repair.”
half to end-users a few years ago, and
to president Mark Bloom, who helped
now we are selling more than half to
launch the company in 2008.
The off-market footprint of
other investors.” “We’ll find properties. Our properties
HomeVestors may be also expanding simply because a greater share of
NetWorth Realty is another direct buyer
are off-market, they are not on
the homes their franchisees buy are
that has been around for several years
the MLS,” he said, adding that the
subsequently re-sold to other investors
and is continuing to grow, with 1,726
properties are also kept off-market
— typically via another off-MLS
deals totaling $234 million in 2016, up
when re-sold to investor clients in an effort to provide those clients with fixed pricing outside of a competitive bidding environment. “We fix our pricing. We
“Our properties are off-market, they are not on the MLS. … We fix our pricing. We keep all of our inventory off market.” MARK B L O O M
P R E S IDE NT, NET W ORT H REA LT Y, DA LLA S, T EXA S
keep all of our inventory off market.” Dollars Attracting Disrupters What is attracting the new wave of potential MLS-disrupters such as REX, Opendoor and Offerpad and fueling the growth of more old-school direct buyers such as HomeVestors and Networth Realty? The short answer is dollars. Real estate is a huge business and there is no fundamental reason why it should not change. Indeed, its very size invites new thinking and approaches: Existing home sales for the year are expected to total roughly 5.5 million units. As of June the median sale price was $258,300. That’s a total of $1.4 trillion in 2017, transactions which will generate commissions worth tens of billions of dollars — a number that goes up with new home sales, mortgage originations, title work, and insurance. CONTINUED ON NEXT PAGE
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T HE O FF- MARK ET H O U S I NG M A R K E T
Those billions of dollars are attractive to disrupters looking for ways to make the process more efficient by lowering gross costs to consumers or raising incomes for brokers and salespeople. And now the nascent success of iBuyers in some local markets has drawn industry giant Zillow — which a decade ago entered the real estate marketplace as a disrupter — into the fray. Zillow Jumps on iBuyer Bandwagon In May Zillow announced that it would begin “testing the Zillow Instant Offers™ marketplace, a way for homeowners to sell their homes quickly by providing them with offers from investors and a comparative market analysis (CMA)
then try to influence those sellers to list
“We’re not seeing it hardly at all,
from a local real estate agent, as an
with a Zillow agent… instead of you.”
because most of the sellers realize
estimate for what the home might
they want to maximize the rate of the
fetch on the open market. In addition
For its part, NAR explains that it “cannot
return … that offer is not going to come
to investors being required to use an
sponsor or encourage a boycott of
from an iBuyer who is looking for a
agent, should a homeowner select an
Zillow. It would be unlawful for NAR to
discounted purchase,” said Mahon,
investor’s offer, Zillow will also offer
discourage members from using any
adding that pocket listings oftentimes
to connect them with a local agent
product or service provider. Those
offer the happy medium for high-
to represent them throughout the
decisions are made independently by
end sellers. “In the luxury market, for
transaction.”
MLSs, brokers, and agents.”
instance, we have some sellers that
The Motely Fool explains the program
Will the Instant Offers plan offend
want private channels in marketing the
this way: “The buyer makes an all-
large real estate licensees to the point
home. If the seller wants maximum
cash offer for the property, allowing
where they cut back their ad buys?
exposure, then yeah put it on the MLS.”
the homeowner to sell without the
Or, will licensees stick with Zillow? As
hassle of putting the home on the
The Motely Fool asks, “is Zillow about
MLS Taking Notice
market. As a result, Realtors are up
to disrupt the residential real estate
The growing number of acquisitions
in arms that the homeowner can
industry and put over 70 percent of its
by iBuyers like Opendoor and Offerpad
complete the transaction with or
ad revenue at risk?”
are catching the attention of the
don’t want it listed on the MLS. … They
without their services.”
Arizona Regional MLS, which in its Mahon, with First Team Real Estate
August STAT report devoted three
Not everyone is happy with Instant
in Southern California, doesn’t see
pages of commentary to an analysis of
Offers. StopZillow has alleged that
the iBuyers as an immediate threat
off-MLS sales in the market, including
“Instant Offers is designed to attract
to his market, which tends to skew
those by iBuyers.
sellers before they call you. Zillow will
higher end.
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“As an analyst, the number one question
Although Ruff admits he believes “it’s
comes from within, making it tougher
I get asked is, ‘What percentage of
impossible to identify a true FSBO from
to combat.
homes sold are listed on the MLS?’”,
our existing dataset” he does break
writes Tom Ruff, housing analyst with
up non-MLS sales into two categories:
But in a phone conversation
The Information Market, a subsidiary of
FSBO and Pocket listings, which
with Housing News Report, Ruff
the ARMLS. Ruff went on to conclude
combined he estimates accounted
characterized the high share of off-MLS
that 81.44 percent of all homes
for 13.41 percent of all sales so far in
buyers in Phoenix as a natural result
purchased in Maricopa and Pinal
2017; and BOSA (Buyer offer Solicitation
of housing market conditions that are
counties in the Phoenix metro area in
Accepted — his term for iBuyers and
more favorable for sellers in general.
the first seven months of 2017 were
other direct buyers), which combined he
listed on the MLS. “Does this mean
estimates accounted for 5.15 percent of
“It’s something that comes up all the
18.56 percent of the homes sold this
all sales so far in 2017.
time. It’s something that comes up over the years,” said Ruff. “The two variables
year are FSBO (For Sale By Owner)? No, not at all. When we think of FSBOs, we
By that measure pocket listings,
that make the biggest determination
traditionally picture a homeowner that
although not as new and flashy as
are new construction and strength of
sells their home without using an agent.
iBuyers, may pose a bigger threat to
the market. Pocket listings will increase
… Today we have ‘iBuyers’ like Opendoor
the dominance MLS. And unlike
… when the market is strong and new
and Offerpad and for over 20 years
iBuyers and other tech-centric
construction (increases).”
we’ve had We Buy Ugly Houses.”
disrupters, the pocket listing threat The Pocket Listings Problem Traditional MLS relationships are being
“As an analyst, the number one question I get asked is, ‘What percentage of homes sold are listed on the MLS?’”
challenged by a growing number of member brokers who believe the fastest and easiest way increase profits is to stop dividing commissions, forget
TOM RUFF
ANALY S T, A RIZ ONA REGIONA L MLS
about MLS cooperation, and cut out other brokers. “Off-MLS listings may contribute to the unraveling of the MLS as we know it, and its replacement by a private network that serves to benefit a certain group of participants,” said consultant Stefan Swanepoel in a 2016 report published by NAR called the Definitive Analysis of the Negative Game Changers Emerging In Real Estate – the DANGER Report. “While it’s controversial and its future is uncertain, the growth of off-MLS listings or ‘coming soon listings’ may well blow up the model of cooperation.” CONTINUED ON NEXT PAGE
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T HE O FF- MARK ET H O U S I NG M A R K E T
FORECLOSURE AUCTION SHARE OF TOTAL HOME SALES FORECLOSURE AUCTION SALES TO THIRD PARTIES
SHARE OF TOTAL SALES
200,000
“Of course there may be legitimate reasons why a ‘pocket listing’ could be of benefit to the seller as well as the lister in a particular instance, but the downside must be clearly explained and signed off on by the client.”
7.00%
180,000
6.00%
160,000
5.00%
140,000 120,000
4.00%
100,000 80,000
3.00%
60,000
2.00%
40,000
RO BE RT N. B A S S
1.00%
20,000 0
ATTOR NE Y, PH O E N I X , A R I ZONA
0.00% 2000
2002
2004
2006
2008
2010
2012
2014
2016
Member brokers are generally required
as the lister in a particular instance, but
of Realtors, explained in 2013 that “if
to enter homes into the MLS system
the downside must be clearly explained
agents limit their listing exposure to only
within two days, but in an environment
and signed off on by the client.
certain sectors of the market, it may
with little inventory two days can
have an alleged discriminatory effect
be quite a head start. The two-day
With a “pocket” listing or a “coming soon”
(i.e. reinforcing segregated housing
standard can be extended if the seller
approach a broker markets a property
patterns) even when there is no intent
signs a form allowing the broker to opt
to a small group of potential purchasers
to discriminate.” (parenthesis hers)
out of the MLS as well as a waiver which
or maybe a few friendly brokers before
says the benefits of an MLS placement
entering the property into the MLS or
Is there a way that “coming soon”
have been explained. As an example, a
maybe entering it in the MLS only once
transactions could be made more
seller might not want a listing to appear
an offer has been accepted.
palatable?
privacy, security (think of a home with a
This may sound fine if the result is a
“Coming soon can be an issue
lot of small, expensive antiques), or until
sale, but sellers can pay a substantial
from many fronts,” said Matthew L.
repairs are completed.
price for such marketing. Because the
Watercutter, principal broker and
on an MLS or online site for reasons of
property is seen by only a small pool
senior regional vice president with
“I would be very interested to see the
of potential buyers, the seller may lose
Ohio-based HER Realtors. “The practice
actual disclosure/authorization form
the opportunity to get a better price
is popular in many communities, and in
that licensees present to their sellers
through wider marketing.
some instances it has a valid purpose,
in these scenarios,” said Robert N.
to make people aware this property
Bass, a Phoenix-based attorney with a
For individual brokers the use of
is soon to be on the market, while the
large real estate practice that includes
pocket listings may lead to accusations
agent and brokerage prepare marketing
defending real estate professionals
of discrimination.
materials, as well as needed staging,
in court. “Of course there may be
photography etc. which takes time to
legitimate reasons why a ‘pocket listing’
Elizabeth Miller-Gadabouts, senior
could be of benefit to the seller as well
counsel to the California Association
put together. CONTINUED ON NEXT PAGE
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T HE O FF- MARK ET H O U S I NG M A R K E T
“Unfortunately, many utilize this practice
funding can readily hire licensees with
In the new world of capitalism short-
to double dip the transaction, therefore
the lure of salaries that are the same
term losses don’t matter. What’s
not necessarily working in the best
month after month. They can offer
important is growth, market share,
interest of the client. More activity and
benefits. Suddenly the real estate
perception, consumer satisfaction,
more offers drive up the price, not less
business is a lot less risky for licensees.
lower costs, and rising share value —
activity because the property is held off
just look at Uber. Bloomberg reports
the market instead of being in the MLS
In the emerging gig economy finding
that for 2016 Uber had revenues of
and marketed to many.”
skilled brokers is hardly a challenge.
$6.5 billion, a $2.8 billion loss, and yet
With the problem of licensure solved,
had nearly $10 billion in cash and
Watercutter adds that “the only way
and therefore with MLS defenses
credit on hand. In June Uber had an
for ‘coming soon’ to be truly a benefit,
overcome from the inside, assuming
estimated market cap of $68 billion.
is you still do not show the home to
one wants to be inside, the question
Name a cab company that can lose
anyone until it is actively marketed,
is what will make a new approach to
nearly $3 billion in a year and survive.
so all potential buyers have a fair and
brokerage different — and better —
Or one that’s worth tens of billions
equal opportunity.”
than current competitors.
of dollars. If your goal is more transactions and
“Coming soon can be an issue from many fronts … More activity and more offers drive up the price, not less activity because the property is held off the market instead of being in the MLS and marketed to many.”
your competitor’s objective is a higher market cap you’re not playing the same game. The traditional values in every profession and industry are now being
MATTH EW L . WATER C UTTER
re-hashed and re-thought so is it far-
P R IN CIPA L BRO KER, HER REA LT O RS, OHIO
fetched to imagine someone thinking of a more-efficient marketplace where brokerage costs are cut to the bone? Where “gatekeepers” and “middlemen”
The Ultimate Change
Surely it’s no secret that terms such as
slow innovation? Where commission
According to the National Association
“MLS” and “multiple listing system” are
structures and percentages change?
of Realtors, members in business for
not trademarked. New competitors can
Where profits can wait and market
more than 16 years had a median
join or not join existing MLS systems,
caps are soaring?
gross income of $78,850 in 2016. That
introduce new concepts, start in a few
means half earned more and half
major metro areas, market like crazy,
If you think entrepreneurs are not
earned less. “Gross” also means income
and in a short time it might be possible
looking at these questions day and
before business expenses for things like
to have a major presence.
night you might as well do business
MLS dues, car mileage, and marketing
with a dial phone. As John Kennedy told
costs. In the end the net is far lower
Backed by vast capital resources
us, “change is the law of life. And those
than the gross.
new players can gain market share
who look only to the past or present
by charging less. Not only might new
are certain to miss the future.”
These numbers also mean something
players charge less, given sufficient size
else: Savvy entrepreneurs with access
they can effectively cause others to
to hundreds of millions of dollars in
charge less as well.
OCTOBER 2017 | ATTOM DATA SOLUTIONS
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