The Lure of a Private Exclusive Listing

As competition in the real estate market heats up and inventories dwindle, home owners may be tempted to get a leg up on the competition by exploring alternate routes for selling their homes. One such method? A private exclusive listing, also known as a “pocket listing,” is a term that can be particularly enticing for homeowners who place a high value on their privacy or owners of a high end property. A private exclusive listing is a home sale that is not listed on the multiple listing service (MLS) but is sold off-market by word-of-mouth within an agency. The property may also be visible on the agency’s website but not on other websites.

While it’s hard to measure exactly how many private property sales take place because they aren’t put on the MLS, one indication of a potential private sale is the presence of a home on the MLS with zero days on the market. In February 2013, data firm RealEstate Business Intelligence (RBI), a subsidiary of Rockville, Md.-based MRIS, reported 215 homes that were listed and sold on the same day in the Mid-Atlantic region. It’s certainly possible that some of these sales really are homes that were placed on the MLS and went under contract on the same day; however, at least some of those sales are likely to have been marketed privately by the listing agent.

At a time when demand outstrips supply, a private exclusive listing may seem like a good thing – proponents attest that listing agents can more easily find buyers on their own or through the agents in their own brokerage. And there is no doubt that inventory is dwindling. In February 2013, RBI reported that there were 21 percent fewer active listings than in February 2012. But, it’s important to note that brokers offering the private exclusive listing approach are keeping your listing “in house,” in essence boosting commissions for their own firm.

Private Exclusive Listings are Legal

While pocket listings are by nature secretive and not openly available to all Realtors and all qualified buyers, these private arrangements are legal as long as the home seller agrees to it. However, real estate law says that Realtors must put their client’s interests in front of their own self-interest. If the sellers actively choose a private exclusive listing, then their listing agent is providing them with the service they want, but if listing agents are advocating for the private listing because they want to keep both the buyers’ and sellers’ commissions for themselves or their brokerage, that may not be in the best interests of the seller.

Sellers also need to realize that Fair Housing Laws say that homeowners cannot discriminate against potential buyers. A private listing cannot be used to screen buyers.

Advantages in Selling on the Open Market

Home sellers have two primary concerns: selling their home quickly and for the highest price. While a broker may emphasize the word “exclusive” and imply that this will garner a special buyer for a property, the reality is that a pocket listing excludes many potential buyers from seeing the home. For some sellers, keeping visitors out of their home has an appeal. After all, no one relishes opening their closets and cabinets to the scrutiny of a stranger.

The problem with that mindset is that an exclusive listing can prove to be extremely limiting. Using this listing method could mean that the home is actually on the market longer because the pool of potential buyers is limited to those agents and home seekers the sales agent contacts directly. Limited viewings will lower demand. Lower demand typically translates into a lower sales price, which completely defeats the goals of the home seller.

Why Exposure Matters in Real Estate

Even if sellers feel satisfied that they received a fair price for their property and relieved that they sold their home quickly, the reality is that sellers who choose a private exclusive listing will never know the true market value of their property. Competition between qualified buyers is the only way to find out the top dollar that someone is willing to pay for a home at any particular time.

A traditional marketing plan, unlike a pocket listing, provides maximum exposure for a property to generate interest among a variety of buyers locally, regionally, nationally and even globally. A private exclusive listing means that the marketing outreach only goes to a select few agents that a listing agent reaches and to the other agents within the brokerage. The pool of potential buyers will naturally be smaller than the number of buyers reached through outreach via the MLS, multiple websites and social media.

A home that has been prepared to show, priced appropriately and shown to as many qualified buyers as possible will be more likely to sell for a higher price than a home that has only been viewed by a limited group of prospective buyers.

Owners concerned about selling their home quickly are likely to find that an appropriately priced property in good condition can sell within a few days as long as it is suitably marketed. In fact, RBI says that average days on market dropped by 21 percent from February 2012 to February 2013. Many listing agents opt to establish a specific day to review offers, such as three to five days after a property goes on the market, to create a sense of urgency among buyers. Sellers can compare offers and choose one, negotiate with prospective buyers or decide to keep their home listed longer on that date.

While some sellers may feel a private exclusive listing that is not accessible to everyone will generate interest in their property, particularly because a “secret” listing can seem more appealing, a home that is actively, widely and appropriately marketed will also garner attention.

Choose a Brokerage Based on Marketing Ability

When listing their home for sale, sellers will be best served by interviewing multiple agents. While a sales professional may flatter a seller by promising a great sales price and extol the virtues of a private exclusive listing, sellers should ask each Realtor the following questions about their marketing plan.

• Will my home be listed in the MLS immediately?
• Will all Realtors have access to my property?
• Will your marketing expose my property to just local agents or will it be seen worldwide?
• How will your marketing plan increase demand for my home?
• How will your marketing plan reach the largest number of qualified buyers?

An experienced Realtor, backed by the strength of a powerful and well-recognized brand like Long & Foster with a 40-year track record of sales success, can provide much more than just a quick sale. At Long & Foster, our highly successful sales associates know that is not just about helping people to buy or sell their homes – it’s about being the very best in providing local market knowledge and global outreach, and offering the total homeownership experience.

An experienced, professional Realtor provides valuable insight into what buyers want in a home today and how sellers can showcase the qualities that make their home an attractive place to live as well as a valuable investment. An experienced Realtor knows that high quality professional photos, accurate and interesting descriptions of a property, and widespread exposure are what make a home sell faster and for more money than an under-marketed residence. When it comes time to look at offers, a highly professional Realtor can help sellers recognize a strong offer and weed out the offers that may not make it all the way to the settlement table.

At Long & Foster, buyers and sellers alike can reap the benefits of and garner exposure from the company’s affiliations with Christie’s International Real Estate, Luxury Portfolio International and the Extraordinary Properties brand. Long & Foster’s multiple services include mortgage lending, insurance, settlement services and property management and all Long & Foster Realtors have an array of local, trusted resources such as moving companies and contractors they can recommend to make every move as smooth as possible.

Before you decide whether to list your property on the open market or to offer it as a private exclusive listing, contact a Long & Foster sales associate in your area to discuss the opportunity of working with the number one seller of luxury properties in the Mid-Atlantic region.

Source: http://www.rbintel.com/statistics