SELLERS SHOULD CAREFULLY CONSIDER WHETHER TO ALLOW AN AGENT TO LIST THEIR HOME "OFF-MARKET" OR "OFF-MLS"
It could cost sellers thousands (if not tens of thousands) of dollars. Here's why:
Like any market, the real estate market is generally driven by straightforward supply and demand principles. In over-simplified terms, when supply is high and demand is low, prices tend to drop, and when supply is low and demand is high, prices tend to spike. It is no secret that the real estate market has been closer to the latter over the past few years. The coronavirus pandemic fueled what was already a low interest rate, low inflation environment, and even lower interest rates and rising "stay-at-home"-driven demand turned a fairly steady market into a very hot one all across the nation.
But for any market to be efficient, and for sellers in the marketplace to reap the benefits of said efficient (hot) market, ALL market participants must be aware of ALL available inventory. Historically speaking, REALTORS have used the Multiple Listing Service (MLS) to present the entire pool of inventory to buyers. In hot real estate markets, all buyers being able to see the entire inventory often leads to multiple offers and higher sale prices. Higher sale prices, of course, means more net proceeds for sellers.
OFF-MARKET LISTINGS: A HARMFUL LISTING STRATEGY
In rare instances, there could be a valid reason to keep a property off the MLS, and to instead opt for a private, limited market. For instance, maybe a seller has legitimate privacy concerns because they are famous or are a public figure. Or perhaps elderly or sick persons, or small children reside in the home and a lot of showings would be disruptive to the household.
Outside of those limited reasons, keeping a property off-market does not benefit home sellers, and it instead serves to line the pockets of their listing brokerage. When a property is only marketed to the listing brokerage's limited pool of buyers, the market is drastically smaller, and the listing brokerage stands to make the entire commission rather than splitting the commission with a cooperating brokerage that might have a better, more qualified buyer. Indeed, the general public and cooperating brokerages are not notified of the listed property's existence, and therefore the vast majority of buyers are not aware the listing even exists.
Again, this can dramatically harm sellers to the tune of thousands (if not tens of thousands) of dollars in the form of lower sale prices and/or months of additional holding costs. Edge Realty has seen multiple offer situations over the past few years resulting in sale prices as much as $75,000 over list price, which would not have occurred in private, off-market scenarios.
That is why it is Edge Realty's policy to use off-market listings only in the extremely limited scenarios listed above. We believe that presenting a home to the entire market, in its best possible light, from the very first impression, is the key to maximizing sale prices for our seller clients.
EDGE REALTY WILL NOT STOOP TO THE NEW LOW TACTIC OF KEEPING LISTINGS PRIVATE FOR OUR FINANCIAL GAIN
Traditionally, the most beneficial listing strategy for sellers is to market the property to the entire market - on the MLS. The MLS is the most complete collection of homes for sale and it is generally recognized as the most efficient vehicle for selling homes for the most amount of money in the shortest amount of time. MLS listings feed to thousands of public-facing websites, which results in increased exposure to buyers and licensed agents who represent active, willing-and-able buyers - not just to the handful of buyers the listing brokerage might be actively working with.
Absent extenuating circumstances, why would a seller not want to reach the entire market? Sellers should be very cautious of what a listing broker is asking them to do, especially if keeping the property off-market is mentioned. Sellers should ask themselves if doing so really benefits them, or if it is designed to benefit the listing brokerage. It is quite possible that what the listing brokerage is doing violates the National Association of REALTOR Code of Ethics, federal and state Fair Housing laws, Missouri real estate regulations, the common law fiduciary duty of loyalty, and MLS rules.
At Edge Realty, we passionately put our clients - and not our wallets - first. If you want to maximize your net sale proceeds, don't list with a brokerage that tries to convince you to participate in an off-market transaction. Instead, call a highly qualified Edge Realty agent who puts your interests first.