By Blanche Evans
In a hot seller's market, home sellers expect not only multiple offers, but a quick sale. If your agent brings you a contract before your home is even listed in the MLS, that can be impressive. Relieved to avoid the emotional and physical wear and tear of having strangers marching through your home, you may sign it and wash your hands of it. But there is something you'll never know and your agent won't tell you - could you have possibly gotten a higher price for your home?
Many agents pride themselves on bringing contracts quickly to the table. They have built reputations with other agents and with buyers for listing and presenting good properties. These agents may farm a particular part of the community, and they have learned to network with other top agents in the same area. They share their new listings with each other as soon as they get them, in the hopes that one of the agents will have an appropriate buyer. In a hot market, they almost always do. This is a good thing because the agents have learned to network outside their own companies, which brings a more equitable marketplace to both sellers and buyers.
But, there is another way agents sell homes quickly that raises questions and that is the practice of in-house listings - reserving the listing from the multiple listings service (MLS) for a period of time, before entering it into the computer. The MLS is a repository of all the listing inventory generated by the members of the board(s) which subscribe to the MLS. The purpose of the MLS is to give as much inventory as possible for agents to show to buyers.
Most MLSs have rules about how quickly agents must input their listings after getting a signed listing agreement with the seller. This grace period can be as long as 10 days in some regions. That is a long time for agents to hold a listing before putting it into the MLS, as gathering tax roll data, measurements, and other listing information can be accomplished in two or three days, in most cases.
If an agent has the listing information ready to go much earlier, why would s/he want to hold a listing instead of putting in the MLS for all to see?
Sometimes the seller may ask the listing agent to hold the listing until they have an opportunity to clean carpets, or otherwise spruce up the home, but more often, the agent might hold on to the listing to give other agents within the same office an opportunity to sell the home.
Some brokerages who serve both sides of the transaction (buyers and sellers) believe that if they can encourage their agents to sell "in-house," that the brokerage will appear more sales efficient to the public. That may be true, but there is a caveat to in-house listings that most sellers don't know. The broker actually makes more money if they can serve both sides of the transaction. Many brokers offer additional incentives to agents to sell in-house listings first, before dipping into the MLS pool.
With the pressure to show in-house listings first, many agents are unaware that they may be doing both the seller and the buyer a disservice. In a hot market. the seller may receive a quick, and adequate contract, but s/he will never know if by exposing the home to the MLS and allowing other agents to see the home, that the home might possibly fetch a buyer who is willing to pay more. The buyer isn't well served because homes disappear from the market so rapidly that they never have a chance to see them, even if they would have been willing to pay more than the "in-house" buyer would have paid. The practice of in-house listings and incentives to sell in-house listings also means that agents will be tempted to show in-house listings to buyers first, even if those homes don't best fit the buyer's criteria. Meanwhile, valuable time could be lost for the buyer as homes better suited to their needs are gobbled up by others in the marketplace.
If you are a seller in a hot market, you simply have to choose which is more important to you - getting the highest dollar possible or having the home-selling experience over as fast as possible. If you want to test the market to see if higher offers might be made, tell your agent that you want to open the home to the entire MLS and all the buyers in the marketplace. You might run the risk of losing the in-house buyer, but if the buyer really wants the home, s/he can compete with the rest of the marketplace.
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