Jackson Heights MLS and Beyond!
In November/December issue of REALTOR magazine, Robert J. Bailey (Chairman of MLSListings Inc) wrote an article titled Off-MLS is Off Base, where he talks about the increase in the number of pocket listings in Sunnyvale California and the how representatives from the largest real estate brokerage firm in China are seeking an MLS platform in their marketplace to establish fair trade.
How does this translate to Jackson Heights Real Estate? Like most of New York City we have already experienced the damage non MLS practices project on our local real estate industry. It manifests itself in low bank appraisals and slower increase in values as a result.
Properly understanding MLS and its importance to our industry, is that it functions as a database of not only available listings but a record of SOLD Properties which comprise the true picture of a local market.
We, Armen & Armen, are committed to continue to add value to the neighborhood we serve and to accurately document the values of the properties we represent by entering our listings into every Multiple Listing database that is available to us and on our site.
In their world, there is no MLS. Agents and brokers can hide a property or enter fake pricing and misleading property details. It’s just a free-for-all, like a real estate Wild West, as the visitors described it to us. What they seek is a platform for fair trade.
Not long after that visit, it occurred to me that as so-called “pocket listings” increase in popularity, we in this country could be headed for the kind of chaos our visitors loathed.
MLSListings research found that properties marketed off the MLS have nearly doubled over the past year in some parts of California. The phenomenon is drawing attention in Chicago and New York, too.
Why does it matter?
When market appraisals, collaboration, CMAs, and other important data are unavailable because they are hidden from the MLS, the integrity of the data is negatively affected. That data is our professional signature in the practice of real estate, and the MLS is the platform on which that data takes its place in the marketplace.
Source of Knowledge
The NATIONAL ASSOCIATION OF REALTORS® and our state and local associations have invested heavily in promoting the value of a real estate professional. Much of that value hinges on our intimate knowledge of a market, and the MLS is our repository of that knowledge. In other words, MLSs are to real estate pros as law libraries are to the lawyer or blueprints are to the architect. It is where we find incontrovertible facts. When the facts are skewed, we are unable to provide the most accurate counsel. Your tool kit for doing business is cheated when listings (or facts) are hidden from that platform.
Model of Fair Trade
Let me sum up the MLS model in two words: fair trade. It can’t happen in the off-MLS environment. This erodes the value of an agent.
Here’s why this matters. Real estate professionals owe a fiduciary duty to the seller. Participation in private-listing groups raises possible fair housing concerns and potential antitrust violations.
I have colleagues who predicted last year that the off-MLS activity was a market reaction to tight inventory. Their reasoning was that when the number of properties is limited, income potential is limited. Hiding available inventory creates a “sure thing” opportunity to keep a transaction within their brokerage or their grasp. But that isn’t entirely so.
In the San Francisco Bay area, off-MLS transactions rose from 15 percent of total sales in 2012 to 26 percent in the first quarter of 2013. That is not a fad—that’s a business model. The sales volume of these transactions in our marketplace topped $3 billion in 2012. This volume is hard-baked into our industry.
Sadly, the ugly side of our industry rides in on the off-MLS wave: those who use the excuse of seller privacy to double-end a deal. Double-ending is the result of the “sure thing” I alluded to above. That is, I can keep a listing to myself or to my brokerage, so when the sale happens, all commissions are within my grasp. One indicator of this type of deal is a report of zero days on market.
I remember when many in the real estate industry had heartburn over the loss of MLS books and the outing of listing information on the Internet. We came to learn that those events were natural evolutions. We have learned to refine our value in the Internet age so that we are not listings researchers but transaction experts.
The off-MLS activity does not have the same connotation as the integration of the Internet in business. The latter was progress. The former, in my estimation, is a foundation for chaos.