Robert J. Bailey, CRB,
serves as board chairman at
MLSListings Inc. and is the
managing broker for Bailey
Properties Inc. in Aptos,
Calif. He will chair NAR’s MLS
Technology and Emerging
Issues Advisory Board in
2014. He is the current
chair of the Consumer and
He can be reached at
O;-MLS is O;-Base
The rise of “pocket listings” threatens the integrity of
market data—and the profession.
Representatives from the largest real estate brokerages in China recently spent a morning at the
MLSListings Inc. o;ces in Sunnyvale, Calif. The
company’s general manager and several agents came
to get a closer look at an MLS and to see how real estate is practiced professionally and with standards.
We, of course, complain about our standards. But
from their perspective, we have a king of a system.
In their world, there is no MLS. Agents and brokers can hide a property or enter fake pricing and
misleading property details. It’s just a free-for-all,
like a real estate Wild West, as the visitors described
it to us. What they seek is a platform for fair trade.
Not long after that visit, it occurred to me that as
so-called “pocket listings” increase in popularity, we
in this country could be headed for the kind of chaos
our visitors loathed.
MLSListings research found that properties marketed o; the MLS have nearly doubled over the past
year in some parts of California. The phenomenon
is drawing attention in Chicago and New York, too.
Why does it matter?
When market appraisals, collaboration, CMAs,
and other important data are unavailable because
they are hidden from the MLS, the integrity of the
data is negatively a;ected. That data is our professional signature in the practice of real estate, and
the MLS is the platform on which that data takes its
place in the marketplace.
Source of Knowledge
The N;;;;;;; A;;;;;;;;;; ;; R;;;;;;;® and
our state and local associations have invested heavily
in promoting the value of a real estate professional.
Much of that value hinges on our intimate knowl-
edge of a market, and the MLS is our repository of
that knowledge. In other words, MLSs are to real
estate pros as law libraries are to the lawyer or blue-
prints are to the architect. It is where we find incon-
trovertible facts. When the facts are skewed, we are
unable to provide the most accurate counsel. Your
tool kit for doing business is cheated when listings
(or facts) are hidden from that platform.
Model of Fair Trade
Let me sum up the MLS model in two words: fair
trade. It can’t happen in the o;-MLS environment.
This erodes the value of an agent.
Here’s why this matters. Real estate professionals owe a fiduciary duty to the seller. Participation
in private-listing groups raises possible fair housing
concerns and potential antitrust violations.
I have colleagues who predicted last year that the
o;-MLS activity was a market reaction to tight inventory. Their reasoning was that when the number
of properties is limited, income potential is limited.
Hiding available inventory creates a “sure thing” opportunity to keep a transaction within their brokerage or their grasp. But that isn’t entirely so.
In the San Francisco Bay area, o;-MLS transactions rose from 15 percent of total sales in 2012 to 26
percent in the first quarter of 2013. That is not a fad—
that’s a business model. The sales volume of these
transactions in our marketplace topped $3 billion in
2012. This volume is hard-baked into our industry.
Sadly, the ugly side of our industry rides in on the
o;-MLS wave: those who use the excuse of seller
privacy to double-end a deal. Double-ending is the
result of the “sure thing” I alluded to above. That is,
I can keep a listing to myself or to my brokerage, so
when the sale happens, all commissions are within
my grasp. One indicator of this type of deal is a report of zero days on market.
I remember when many in the real estate industry
had heartburn over the loss of MLS books and the
outing of listing information on the Internet. We
came to learn that those events were natural evolutions. We have learned to refine our value in the Internet age so that we are not listings researchers but
The o;-MLS activity does not have the same
connotation as the integration of the Internet in
business. The latter was progress. The former, in my
estimation, is a foundation for chaos. W
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