Undisclosed Mutiny; Home Sellers Smiling as they Walk the Planks of their Own Ships
This Market Wise Q&A column ran twice for the Bay Area News Group. The issue remains yet another “best kept” secret for the real estate industry.
Plus! Included is part 4 of our video series on this nationwide problem of "Off-MLS Listings" featuring Real Estate Attorney Sam Chuck.
Q: We were a little shocked to learn our next door neighbor of twenty years sold their home last week without signs, open houses or brokers coming and going. Days later we were stunned to learn the buyer got a sweetheart of a price. Now it appears the same “neighborhood specialist” represented the buyer as well as the seller. How can this possibly be acceptable behavior?
A: Throughout the buyers market of The Great Recession, regular listing agents were on their knees begging colleagues to show and sell their listings. As soon as the flood of listings receded into the current Sellers market, many of these same listing agents claimed it was in their seller’s best interest to forego promoting their client’s properties with thousands of fellow REALTORS® through the Multiple Listing Service (MLS), or the sea of buyers aboard dozens of websites on the World Wide Web. Instead, as the hired helmsmen, they stow away their clients’ properties in dry dock as they pilot the sales themselves or in-office. These sellers, and by default their neighboring property owners, have unknowingly lost untold oceans of wealth through no fault of their own. The captains they entrusted to navigate the tricky waters of home selling seemingly had foggy moral compasses.
Once any salesperson thinks about his or her own pocketbook instead of their customer’s, they have crossed the ethical line in the sand.
In Santa Clara County, the heart of Silicon Valley technology, the local Multiple Listing Service has been painstakingly dredging up the statical rising waves of listings that were withheld from the 15,000 members of the MLS. In 2012 there were 2,700 off-MLS residential transactions that had a median selling price of $64,000 lower than MLS sales. In 2013, the off-MLS wave grew to a chart topping 3,600 which accounted for a $105,000 lower median selling price compared to MLS sales.
It’s rogue listing agents, not rogue waves, that cause these massive losses. Real estate attorneys have always had cases of sellers selling low and “in-house” but now the “harbor police” are keeping an eye on this issue as well. Like a tsunamis, indiscernible on the surface, once the massive wave of litigation strikes, it will be “all hands on deck” to defend listing agents selling off-MLS while practicing dual-agency because their navigation on the surface is usually ~ indefensible.
Published 4/6/14 & 10/26/14
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In 2014, Pat was the 2013 Santa Clara County Association of Realtors “President’s Choice” Award Winner. "For demonstrating the principles of good real estate practice among brokers; for promoting and protecting home ownership and property rights for all; and for distinguished service to the members of the Santa Clara County Association of REALTORS® and the community at large."