Starting in May, Houston neighborhoods should see far fewer “Coming Soon” and “Non-MLS Listing” real estate yard signs. The practice of pre-marketing listings before they are officially on the market or publicly listed on the Multiple Listing Service (MLS), which in Houston is the familiar HAR.com, has been commonplace for many years. Similarly, “pocket listings” are homes that an agent can market without ever putting them on the MLS.
The rise of mega-brokerages emphasizing technology and branding, along with an increasing push to right past wrongs in equal housing opportunity, has given the National Association of Realtors and the U.S. Department of Housing and Urban Development reason to revisit the broader impact of marketing homes to a limited pool of buyers. This is often done via brokerage websites, neighborhood signs, and targeted advertising. According to real estate broker and owner of Boulevard Realty Bill Baldwin, this practice has always been a dubious way to serve home sellers.
“Pre-marketing or marketing homes off the MLS has always been pitched to sellers as being in their best interest for extra or niche exposure, but I would argue that it is the opposite,” Baldwin advises. “It is really in the interest of the listing agent, who is almost always leveraging a pocket listing to pick up buyers.”
Effective May 1, MLSs and Realtor associations like the Houston Association of Realtors (HAR) must implement and enforce what is known as a “Clear Cooperation Policy” by which all homes advertised for sale by any agent or broker must be made publicly available on the MLS within one day of being promoted in any way. Baldwin, who is also a member of the HAR task force assigned to implement the policy in Houston, says it has long been the policy of his firm to avoid non-MLS sales. “The main reason a non-MLS sale is a disservice to sellers is because real estate prices are entirely dictated by the market,” he explains, adding, “How can a seller or agent know what a home is truly worth without exposing it to the widest pool of buyers on the MLS? It seems highly unethical to advise a seller to accept any offer without really seeing what the market will yield.”
Baldwin further warns of the intrinsic inequality of not immediately listing homes for sale on the MLS. “Marketing a pocket listing to a select group of buyers or realtors is inherently discriminatory,” expresses Baldwin, who devoted a large portion of Boulevard’s annual sales summit for its agents to addressing fair housing concerns, unconscious bias, and anti-discrimination. While the Fair Housing Act of 1968 bans outright housing discrimination and racially selective deed restrictions, Baldwin expresses his concern that limiting exposure places a de facto limitation on who has access to a neighborhood, “It may seem harmless to try to attract the ‘ideal buyer’ without having to go through the hassle of a lot of showings or having the inside of your home virtually open for all to see, but the reality is that this perpetuates our country’s history of highly unequal housing opportunity.” With HUD’s renewed focus on keeping the housing market as level a playing field as possible, other regulations—like how homes can be advertised using Facebook targeting—have gone into effect as well.
While these policies are meant to address more structural market forces in residential real estate, they will have a direct impact on brokerages whose business model relies on having “exclusive” listings or who use that as a tool to entice sellers into listing agreements. After May 1, any Realtor who advertises a listing without reporting it to the MLS may face stiff penalties. At Boulevard Realty, the policy is already in full effect.
“At a certain point, we have to focus on what is best for our sellers, home buyers, and our need to have equitable, diverse neighborhoods,” expresses Baldwin. “If it means we have to adapt to what is already a fairly lax regulatory environment when it comes to housing, I think that is a worthy cause.”
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