As relating to Private Listings, there is a lot of chatter about fairness, transparency, freedom of choice, competitiveness and discrimination (fair housing) issues, and much uncertainty surrounding best practices. Here's my take:
Private listings offer certain advantages to sellers:
- increased privacy and control over who enters the property
- fewer showings and less disruption to a homeowner's daily schedule
- greater likelihood that a buyer will be unrepresented by a broker resulting in a lower broker commission
- a way to see if a property is priced and staged correctly without racking up days on the market
There are disadvantages to sellers:
- fewer showings may result in less competition and possibly lower offers
- longer time on the market than if it was open to all agents immediately
- the seller's goals of maximizing sales price and a timely sale may be compromised
How should a seller decide whether to list a property privately? Ask the broker the following questions:
• Do you handle many private exclusives?
• How does listing privately benefit me and my goals?
• Is this a temporary strategy to check our pricing before going live?
• Are you recommending a private listing because my desired price is unrealistic?
• How will you share my property with agents at and outside of your brokerage?
• If my listing is only shown to a small set of buyers, will that prevent a bidding war and achieving a higher price?
• If my property does not sell as a private exclusive, will the listing still appeal to buyers?
• How are you planning to get my property in front of the most buyers?
• Will it be on the major listings sites? When?
• How should a buyer decide whether to join and work through a private buyers’ network?
Ask the broker following questions:
How will I know that I am seeing all possible listings in my price range if only select agents have select listings?
• How many properties that fit my criteria are currently available as private listings at your brokerage?
• Do these properties remain as private exclusives or do they eventually get listed on publicly accessible sites?
• How many sales does your firm close for properties that have exclusively been marketed as private listings?
• Have the private listings at your company been sitting on the market for a long time?
• How will I know how long a property has been on the market and whether there have been any price corrections?
• Am I paying a premium for access to something that is only available to a segment of the market?
• Should I have my lawyer review the Buyer Agency Agreement and Buyer Network Agreement? (HINT: The answer is YES!)
We have discussed that private exclusives may offer advantages and disadvantages to certain sellers and certain buyers. They also offer advantages and disadvantages to individual brokers, the brokerage community and the industry as a whole. The issues raised above: fairness, transparency, freedom of choice, competitiveness and discrimination are more relevant to the integrity of the industry than to the individual seller or buyer. Professionals who practice in the industry will have their own opinions about the pros and cons of private listings.
Private listings are not for everyone and for the time being, buyers and sellers may elect how they wish to be represented. I recommend that they consult with their trusted advisors and be strategic in their choices on how best to proceed to meet their unique needs.
