There is growing concern among real estate companies that off market real estate sales are creating headaches in the market. Next month I will publish exactly how many 90402 sales closed in the 2013 without MLS exposure. Although there were plenty of these off market deals that went down this year, it definitely feels like fewer this year than last.
If I’m correct and there have been fewer, the reasons are varied. Many of the smaller, less connected companies and lower-volume brokers complained loudly this year with the valid argument that sales that close without MLS publication are problematic because the closed sales don’t become part of the database realtors use to price comparable properties. Without the sales data in the MLS, valuable insight into market pricing is not available, making it harder to advise clients on values.
Another reason MLS advocates prefer to publish is the widely held belief that the more exposure a property gets, the better the resulting sale price might be. This is because the competitive bidding that sometimes takes place when properties are introduced to the larger (MLS) marketplace often causes prices to climb higher than their apparent true market value. Makes sense, right?
Agents are now being pressured by colleagues, the MLS and competitors to encourage, or even insist, that home sellers allow that listing information be distributed to the entire MLS. This gives the less connected agents, who sometimes operate without a referral network, the ability to participate in selling properties that they otherwise would be unaware of.
Why off market in the first place? Some agents, for selfish reasons, would rather not cooperate with another agent, or brokerage company because sharing the sales commission with outside agents is not as exciting as retaining it all themselves. This happens very often in the commercial real estate world. Apartment buildings, shopping centers and office buildings are often brokered by one agent with no cooperation or consideration to a co-broker, but as you might expect, most residential real estate sales involve more than one agent.
Many home sellers prefer to deal with only their agent, not two. Fewer people involved in a deal can significantly simplify the transaction. Privacy concerns are often the reason for keeping a property off the market.
Frequently pocket listings are created by a seller’s casual remark like one I heard last week. It sounded like this: “Well John, we don’t really need this big house anymore, and we aren’t really looking to list it or anything, but if you brought us a Buyer willing to pay $4.5M, we would sell it”. And, just like that, I now have a pocket listing that I’m showing to a Buyer prospect this weekend J.
Sellers have to be sure of their “make me move price”. In other words, at what price would you as a seller say, “for that price, I’m selling without any hesitation”. For some sellers, not having the benefit of the discovery that accompanies publishing in the MLS is a problem. This is common when a property is difficult to value. For some, the fear that they are leaving money on the table is too big a risk to take. These sellers have to have seen what the market reaction is and 1 or 2 showings, with no advertising or promotion is not sufficient marketing action for them.
Off market deals have been part of the real estate landscape forever and although I‘m betting there were fewer of them in 2013, they are here to stay.
Here is your real time MLS data:
There’s one new listing that came on the market this week bringing the total number of homes available to 18. There were no new sales reported to the MLS this week and a total of five homes are showing as under contract. An $8.4 million+ home on Georgina closed escrow this week, bringing the total number closed year to date to 75, one more from last week.
If you have been reading my blog for a while or paying attention to other real estate data you are probably noticing that the 4th quarter of 2012 was far busier than this 4th quarter. Sellers last December were desperate to close transactions before the Obamacare taxes kicked in on January 2, 2013.
New Listings this Week
728 25th St. – 5bd + 6.5ba. $4,700,000. Listed by Pence Hathorn Silver. Extensively remodeled Spanish over 5,600 sq. ft. Quality craftsmanship throughout. Gourmet kitchen, spacious family room, luxurious master suite & bath. Landscaped and private backyard. Finished basement over 1,000 sq. ft. (per builder) w/kitchenette, full bath.
632 16th St. – 4bd + 5ba. $3,999,000. Gated Mediterranean designed by Richard Landry. Hardwood floors, winding staircase, high ceilings. Oasis pool, spa & waterfall. Detached guest house. Last sold in December 2012 for $3,521,500.
No New Sales this Week
Closed Deals this Week
607 Georgina – 4bd + 4.5ba – $8,465,000
Pence Hathorn Silver Active Properties:
2009 La Mesa – 6bd + 8ba – $18,900,000
502 16th St. – 5bd + 7.5ba – $8,495,000
6415 Meadows Court – 6bd + 7ba – $5,995,000
728 25th St. – 5bd + 6.5ba – $4,700,000
168 S. Medio – 5bd + 3.5ba – $3,850,000
217 21st St. – 4bd + 4.5ba – $3,350,000
248 14th St. – 4bd + 4ba – $3,250,000
416 Entrada Dr. – 3bd + 1.75ba – $1,595,000
Search for more homes, see real time analytics and learn about the North Santa Monica / North of Montana Ave. community on our North of Montana blog. Add your comments (scroll down to the “Add Your Comment” section) and read other blogs. And please call my mobile phone (310) 924-4014 with any questions.