There’s a lot of controversy swirling around the “off market” or “off MLS” sales of properties when professional real estate agents are involved in the transaction, whether they are part of an mls-type of club or a pocket listing which was independently brokered without the multiple listing service. Ordinarily, homes listed for sale are offered as such on the multiple listing service, or MLS. Sometimes, though, for a wide variety of reasons, some homes sell without having been marketed there.
In many cases, even if the sale was “off market”, the real estate licensee representing the seller will put the sale on the MLS at the time of closing so that the sale price can be used as a comp, or comparable sale. In other words, they add it because it’s an important element in the database.
When there’s a low price tag, though, some Realtors or other licensees don’t want that price to show up on the MLS. Why not, you may wonder. Their thinking often runs along the line of “we don’t want to hurt property values” or “that’s going to hurt my listing which is coming up in a couple of weeks”.
There are lots of shades of gray and I don’t want to say that any time a price is withheld from the MLS there’s foul play involved on the side of the listing agent. It’s not always “easy ethics” and what may appear as one person’s misstep may in fact be another’s. I’ll share with you a story out of my own experience.
A couple of years ago I had a Los Gatos home for sale in the Strathmore neighborhood that received a pre-emptive offer, before we were even ready to go on the market. My sellers decided to take it because it was a time of some financial instability and they weren’t sure that waiting was wise. The agent working with the buyers (not a Sereno Group Realtor) made not placing the sale on the MLS at closing a condition for contingency removal. I don’t think that’s enforceable or acceptable, but my seller didn’t care (though I did). So I did not place it on the MLS, per my seller’s agreement and instructions.
Who did this harm? Home buyers, that’s who. By keeping the lowball values out of sight, home prices may be a little inflated because of missing information. (Needless to say, I blogged about the sale – profusely.)
I had thought and hoped that my sale’s experience was a fluke. But lately I’m hearing Realtors talk about not putting low sales on the MLS as if that’s the norm with off market listings. That concerns me.
So what can you do? What we should want is simply the truth. Not the market with a mask on it, but what’s actually transpiring.
There may be a way to get the truth, or a little more of it, even if some agents are pulling this stunt. In many or probably most cases, the sale is still findable through the county records – though that’s not always the case. Real estate professionals in Silicon Valley can pull the Realist Report on any property and it will generate comps, both off and on the MLS. A disclaimer: some of those transfers aren’t sales, but refinances or transfers from one family member to the other, or a quit claim deed at the time of a divorce. Some of the super low numbers may be because the property wasn’t sold at all.