By Anne Marie DeCatsye
A key aspect of the decision by the CarolinaMLS Board of Directors to add the “Coming Soon” status to the MLS deals with the MLS itself.
Not only will the decision help buyers and sellers and brokers who serve them — as CarolinaMLS President Maren Brisson-Kuester points out in her column — it enhances the value of CarolinaMLS.
Katie Johnson, senior vice president and general counsel for NAR, explained that so clearly at our recent Realtor® Hot Topic that I’d like to share many of her remarks. Via Skype, she addressed more than 100 brokers at Friendship Baptist Church on Aug. 15.
MLSs go back more than 100 years in the U.S. and still have the same basic structure they did in the beginning, Katie pointed out. Our industry is the envy of many others in that the MLS is a structural market of competitors, offering not only cooperation and compensation to one another but order in the marketplace.
But in some markets, MLSs have lost value because a high percentage of agents are transacting sales without listing properties in the MLS, Katie noted. She cited an agent in California who posted a response to an Inman article, saying: “Our MLS has become an outlet of last resort — something an agent does when she or he can’t sell a listing in-house or by double-ending it themselves. I can foresee a day when there will be no MLS. R.I.P.”
Katie responded: “We’re not ready for R.I.P. so we’re not going to let that happen. But as you know, ‘off-MLS listings’ is a real trend that presents several downsides to our industry.”
“Off-Market” listings are often called office exclusives, pocket listings or Coming Soon listings. The labels are frequently used interchangeably to mean the same thing, and CarolinaMLS is making an effort to distinguish them. Off-market listings have proliferated in tight inventory markets like ours, but they may or may not be in the best interest of clients.
Pocket listings have been around forever and, done correctly, are legal. There are legitimate reasons why sellers may not want their listings in the MLS.
However, Coming Soon listings have increased dramatically as a relatively new phenomenon in tight markets. While Coming Soon marketing may be a great tactic to excite interest, the fact is that these Common Soon listings, if sold outside the MLS, may not be in the best interest of sellers. They also can certainly have a negative effect on the MLS and be counter to MLS efforts to establish a fair and orderly market. Our hope is to provide listing brokerages the ability to market their Coming Soon listings in CarolinaMLS.
Here’s how off-market listings harm the MLS, Katie noted:
- “Lack of trust and confidence in the MLS info.”
- “Inaccurate statistical information — affects valuations and the economy generally. Lenders, appraisers, brokers and others rely on MLS data to determine fair market value of properties.”
- “Poor reputation by consumers if it is perceived that the listings are intended to help agents double-end deals.”
- “Failure of Realtors® to fulfill their ethical duty to cooperate.”
When MLSs emerged in the late 1800s and early 1900s, they “revolutionized how homes were bought and sold,” Katie said. Created by real estate practitioners “to best serve the home seller in light of the growing availability of housing,” MLSs became the way agents spread the word of available homes to fellow agents.
The real estate boards that created the early MLSs also “required participants to have written exclusive agency agreements for each listing” so as to avoid disputes among agents over commissions. The board also created “standard forms for sharing listing information, making an offer and selling a house,” she continued. “The cooperative nature of the MLS completely changed how real estate was transacted.”
Our MLS Began in 1950
In Charlotte, our Association tried to start an MLS in the second and third years of its existence, 1923 and 1924. Board records from 1924 show “overpricing of properties and not listing properties likely to sell quickly” dashed the effort. It wasn’t until 1950 that our MLS was successfully launched. Within a few years, it took off as its benefits overcame the issue of agents not listing their best properties.
As Katie pointed out, those MLS benefits still exist today:
- “Easiest way to market to the widest audience.”
- “Associations invented the exclusive contract … to protect owners from having to pay multiple commissions and emphasized the need for cooperation amongst real estate professionals.”
- “Enabled buyers to share their personal financial information with only one real estate practitioner.”
- “Regarding the creation of an MLS by the local board in Los Angeles, a Realtor® wrote, ‘In place of chaos, a wonderful feeling of comradeship and trust has developed among our members.’”
Katie’s conclusion is one I heartily share. “The MLS works so well now and for the last 100 years because you all agree to cooperate with each other,” she said of subscribers. “It’s a core component of an MLS. When that component disappears, so too will the value of the MLS.”