Properties are being hogged from the Public Market.

Properties are being hogged from the Public Market.

Real Estate Coach · Member since 2018 · 245 posts · 216 votes

I've notice that properties are being sold with the printed line "pending at ink" which means the seller accepted an offer before the property gets released on MLS. 

What I believe is really happening, is that properties are being held back purposely from the public market and hogged to limit other people from buying it, which could have a negative effect on a realtors commission. Realtors will get the listing and instead post it to the public for fair game they use their personal contacts to sell the house. I think this should be banned and at least have a 2 or 3 day mandatory MLS posting period before an offer is accepted. 

Although Iv'e seen this many times. I only mention this because the houses that are selling with the "pending at ink" label, could have sold for easily double the amount in a matter of days. 

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y
Originally posted by @Jay Hinrichs:

in most markets private sellers dictate what an agent can do..   not the other way around.. they risk discipline if they are not representing the seller.. 

Yup seller dictates. They agree or dont agree (largely by our recommendation) of whether to list on the mls. Im part of a private off market MLS in my area, where sometimes I can sell properties for more money by never coming to the MLS. The lack of liquidity and exclusivity can push the price higher. Most of the athletes and politicians homes never get listed on the mls, and we usually have non disclosure agreements when we are involved with those.

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    7y

    I don't know - the way I see it, it's a self-correcting problem. If houses are being sold at below-market prices by insiders, everything that hits the market then gets corrected by the lower priced sales because that's what they're going to comp against. 

    Aside from that, it's not like this is really new. If a realtor goes to list a house, and S/he thinks its a good deal, there's really nothing from stopping them from telling the seller "I'll pay you this right now, or this is what I think the house could/should sell for on the open market." 

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  • Real Estate Investor · Unionville, CT · Member since 2016 · 260 posts · 167 votes
    7y

    @Darius Kellar it's referred to as a "pocket listing" and in my state is illegal but it happens. Properties when listed with a broker must be put on the MLS and wait 24 hours before and offer is excepted. This doesn't always happen unfortunately.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    in most markets private sellers dictate what an agent can do..   not the other way around.. they risk discipline if they are not representing the seller.. 

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y
    Originally posted by @Julie N.:

    @Darius Kellar it's referred to as a "pocket listing" and in my state is illegal but it happens. Properties when listed with a broker must be put on the MLS and wait 24 hours before and offer is excepted. This doesn't always happen unfortunately.

     Why would the state of Utah make that illegal? Thats absolutely crazy to me and hurts consumer choice.  Your housing lobbying arms should absolutely lobby to have that overturned. In fact I have little doubt that a federal court would strike that down.

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y
    Originally posted by @Jay Hinrichs:

    in most markets private sellers dictate what an agent can do..   not the other way around.. they risk discipline if they are not representing the seller.. 

    Yup seller dictates. They agree or dont agree (largely by our recommendation) of whether to list on the mls. Im part of a private off market MLS in my area, where sometimes I can sell properties for more money by never coming to the MLS. The lack of liquidity and exclusivity can push the price higher. Most of the athletes and politicians homes never get listed on the mls, and we usually have non disclosure agreements when we are involved with those.

  • Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
    7y

    It will depend on your local regulations. I want to say that our local regulation requires us to have listings posted within 48 hours of signing the listing agreement, but your state may even have a longer time period than that. It's up to the seller to decide whether they want their property marketed on the MLS. Some people choose to not market this way. Also, like @JD Martin mentioned, as long as it's disclosed, there is nothing that stops listing agents from buying the property themselves.

    Also, it's worth noting that most realtors will start marketing properties before the listing agreement is even officially signed. They may start marketing "coming soon" or "pocket listings" to other realtors that they know have a great reputation for closing deals quickly. As SOON as they get that paperwork signed, they will start doing pre-showings to qualified buyers before it even hits the MLS.

    Also, it's up to the agent and the seller to decide what the property should sell for. There are a lot of sellers that are willing to take a cash offer that closes quickly over higher offers that are using financing. 

    It seems unfair to you, but the job of the listing Realtor is to help the seller meet their needs. Whether that's getting the absolute top dollar or selling quickly and discreetly, that's between the seller and their agent.  

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Russell Brazil:
    Originally posted by @Jay Hinrichs:

    in most markets private sellers dictate what an agent can do..   not the other way around.. they risk discipline if they are not representing the seller.. 

    Yup seller dictates. They agree or dont agree (largely by our recommendation) of whether to list on the mls. Im part of a private off market MLS in my area, where sometimes I can sell properties for more money by never coming to the MLS. The lack of liquidity and exclusivity can push the price higher. Most of the athletes and politicians homes never get listed on the mls, and we usually have non disclosure agreements when we are involved with those.

    its the exact theory unlicensed wholesalers like to spout.. the seller does not want to be bothered with public marketing.. no differnce 

  • Real Estate Coach · Member since 2018 · 245 posts · 216 votes
    7y

    @Julie N.  @Russell Brazil @Cassi Justiz @Jay Hinrichs @JD Martin Thanks for your responses.  

    Apparently this is not universal law as it seems that in Michigan the best way to put myself on the same playing field for equal opportunity is by extending my contact information to multiple brokers. 

  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    7y
    Originally posted by @Darius Kellar:

    @Julie N.  @Russell Brazil @Cassi Justiz @Jay Hinrichs @JD Martin Thanks for your responses.  

    Apparently this is not universal law as it seems that in Michigan the best way to put myself on the same playing field for equal opportunity is by extending my contact information to multiple brokers. 

    I can't speak to Michigan, but I will tell you that my agent tells me about things he's about to list before they get to MLS all the time to gauge my level of interest before the fact. If a seller wants $100k, and he can get it from me before the listing ever goes live, that's a win for everyone. Including the market, for if every property would "go for double" that amount, your area would be in bubble city in no time. As long as the seller is being responsible in a fiduciary manner and being honest with what kind of offers the seller should expect based on the property specifics. If a realtor was using his/her license to convince sellers their home was worth $50k so they could buy it immediately and resell it for $100k, the true market value, I suspect that's illegal in most states and the seller could sue and recover the lost value, not to mention the realtor losing his/her license and maybe even being indicted.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Darius Kellar:

    @Julie N.  @Russell Brazil @Cassi Justiz @Jay Hinrichs @JD Martin Thanks for your responses.  

    Apparently this is not universal law as it seems that in Michigan the best way to put myself on the same playing field for equal opportunity is by extending my contact information to multiple brokers. 

    Yup you need to break the broker code.. when I was a pup and one of my first jobs at 17 was selling dental equipment ( now that was a tough gig).. and really motivated me to get my RE license.. anyway. the guy that owned the shop sat me down pulls out his Amex card and said this is how you do it.. 90% of folks out there cannot resist a free lunch.. So find the brokers ask them what their favorite restaurant is and offer to buy them lunch and have you POF with you.. CASH Is king.. and or make it a restaurant that you know is knew edgy and hot. most folks just cant resist. spend money courting the brokers then once your in the flow they will start to buy U lunch

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @JD Martin:
    Originally posted by @Darius Kellar:

    @Julie N.  @Russell Brazil @Cassi Justiz @Jay Hinrichs @JD Martin Thanks for your responses.  

    Apparently this is not universal law as it seems that in Michigan the best way to put myself on the same playing field for equal opportunity is by extending my contact information to multiple brokers. 

    I can't speak to Michigan, but I will tell you that my agent tells me about things he's about to list before they get to MLS all the time to gauge my level of interest before the fact. If a seller wants $100k, and he can get it from me before the listing ever goes live, that's a win for everyone. Including the market, for if every property would "go for double" that amount, your area would be in bubble city in no time. As long as the seller is being responsible in a fiduciary manner and being honest with what kind of offers the seller should expect based on the property specifics. If a realtor was using his/her license to convince sellers their home was worth $50k so they could buy it immediately and resell it for $100k, the true market value, I suspect that's illegal in most states and the seller could sue and recover the lost value, not to mention the realtor losing his/her license and maybe even being indicted.

     yup that's not legal for agents or wholesalers.. NO one can make false claims to derive unconscionable profits.  Be them licensed or not

    many wholesalers are told by their Swami that they should not get a license because you don't want to get in trouble for ripping equity.

    when in fact anyone can get in trouble for that scenario.. licensed or not.

  • Broker · Logan, UT · Member since 2013 · 1k+ posts · 1k+ votes
    7y

    @Russell Brazil

    Don't know where you got Utah from @Julie N.'s comment. Either way, there's no regulation by the state of Utah. The terms of service of our major MLS require that an agent list a property within 5 days except if the seller signs an exclusion waiver.

  • Real Estate Broker · Tacoma, WA · Member since 2016 · 545 posts · 252 votes
    7y

    I disagree. Part of being a good agent is having the buyers on deck. I understand the frustration of not being able to see properties listed, however, if the agent gets the price the client wants without having to go through the exercise of listing it on the market, that agent is doing their job well.

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y
    Originally posted by @William Hochstedler:

    @Russell Brazil

    Don't know where you got Utah from @Julie N.'s comment. Either way, there's no regulation by the state of Utah. The terms of service of our major MLS require that an agent list a property within 5 days except if the seller signs an exclusion waiver.

    I got it from her comments because her location is listed as Utah, and she stated it was illegal. I dont know anything about Utah law and was responding to her statement. Im glad to hear that it is in fact not illegal, as like I said, I think it would be completely ridiculous if it were, and think a federal court would easily strike down such a law if challenged.

  • Real Estate Broker · Detroit, MI · Member since 2014 · 384 posts · 149 votes
    7y

    @Darius Kellar this only does an injustice to the seller not the buyer. The seller has a contract with the listing agent and has to accept the offer from the buyer in order for it to go pending. I can see your frustration but in no way are potential buyers being injured.

  • Rental Property Investor · Ocala, FL · Member since 2016 · 226 posts · 140 votes
    7y

    @Darius Kellar

    What? You say Realtors should be REQUIRED to put properties on the MLS? If I tell Realtors what I am wanting to buy, and they call me with one. it gets sold. How in the USA is that wrong? Build your contacts with Realtors. We don't need government running small businesses.

  • Specialist · Salado, TX · Member since 2014 · 69 posts · 50 votes
    7y

    In my state a listing agent has a fiduciary responsibility to the seller.  This means they must work to obtain the best price possible for their client, first.  The state considers an agent to be an RE expert and non-licensed people uninformed.

    Foregoing open market exposure, even with the consent of the seller, skirts the fiduciary responsibility and is a sure way to open yourself up to an agency complaint and lawsuit after the sale.  I personally know of agents and their brokers who lost their license and the lawsuit over this very issue.  

    Attorneys love these cases and sometimes take them without retainer because they’re usually a slam dunk and backed up by the agency recovery fund followed by a personal judgement from the state against the agent/broker for all costs.   

    A fiduciary is required to advise you from making financial mistakes, like taking less than market value for your RE.  If you sell pocket listings, and want to have any chance in a dispute, you’d better have a thick paper trail showing you discouraged it completely from the start.

    There is always a boom in pocket listing activity going on in an up market.  But neighbors talk and sellers get angry when they learn they lost money because an agent convinced them to take a bird in hand.

    If all I wanted to do was invest in RE, I would never get a RE license.  It increases your responsibilities and personal liability 10x.

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