We’ve received several calls about new listings that are first hitting the MLS as pending. From now on, we will be reaching out to all agents and their brokers when this occurs to share the following information from legal counsel about this: While it is not unethical for the seller to accept an offer within the two business days it took to enter it, Realtors must be clearly explaining to the seller how limited exposure of their home could negatively affect the price and terms before they accept an offer. Pros and cons – and working in THEIR best interest.
Do you wonder why the #1 home seller in the country, Fannie and Freddie, make their agent show proof that the home as been listed in the MLS for at least 48 hours before considering any offers? It’s because they know the value and importance of exposure to the broadest market – the MLS – for the best price and terms. Do you know why appraisers can’t use that home for a comp? Because they know that it doesn’t represent “fair market value”.
Bottom line: Maximum exposure is a critical part of selling a home for the highest price. Depriving a seller of the opportunity for full marketing without sharing with them the potential pitfalls is a violation of your duties owed to them. Some sellers are in a hurry and forego that option, and that’s fine, but it should be their fully-informed decision, not yours. Be super aware that you are working for THEIR best interests, not your own. Here is a video from legal counsel about coming soon and “pre-sold listings that may be an eye opener!
Impact to the MLS Community
The primary purpose of the MLS is to foster cooperation and establish offers of compensation among participating brokers. Instead of promoting cooperation, the use of pocket or coming soon listings may discourage and may dampen that spirit of sharing listing information, as well provide no assurance of cooperative compensation should you find yourself involved in a transaction that includes a non-MLS listing.
Outside of the effect these listings could have on your seller, pocket listings also adversely affect information everyone relies on the MLS to provide. Please don’t forget that appraisers rely on the MLS data to create accurate appraisals. Many lenders will not allow non-MLS sales to be used as comparables because those properties were not adequately exposed to the market and, therefore are not an accurate representation of market-driven prices. Brokers and salespersons also heavily use the MLS database to help sellers determine list price and to help buyers determine what they should offer. Sales that aren’t included in the MLS lead to incomplete and inaccurate results.