Call it another by-product of our hot, inventory-deprived real estate market that was created out of the wreckage of the worst recession since the Great Depression.Last week while the nation’s top real estate editors were gathered in Houston, Zillow launched a new on line real estate search to help consumers find pre-market listings.
Call them Hip Pockets, call them Whisper Listings, whatever you call them, they are properties that are NOT yet in MLS, but are available for sale. An agent may or may not be involved.
These are the listings that everyone has been having a real estate cow over. About this time last year, NTREIS announced plans for a task-force to investigate hip pocket listings. Most Realtors think hip pocket listings are dangerous because they rob the MLS of valuable data we need, comparative values, to set home pricing. If five homes in a neighborhood sell within 6 months in MLS, the next home listed has a pretty clear idea of value. If those same five homes all sell as pre-market listing hip pockets, there is no obligation to record the financial data of the transaction. Hence, listing #6 has no comparatives. Value becomes a head-scratcher.
I am dying to know what the real estate community thinks about this, dying even more to see where it will go. Will Zillow enthrall consumers and pull in even more visitors? Will Trulia follow suit? Will this lead to even more non MLS action? How will local MLS associations keep up or, as some agents say, shape up?
Realtors who currently advertise with Zillow, and brokerages who provide Zillow with listings in a feed, will be able to advertise pre-market listings on the “Coming Soon” feature, for up to 30 days on Zillow.com.
Experts think this may give Zillow even more eyeballs than ever. Currently, Zillow seems to be marching the the head of the line in the on-line portal race, taking full advantage of it’s 45 million unique visitors per month, a figure they claim is low.
The truth is, hip pocket sales are growing. If you are buying a house, chances are you know this. In a hot market with less than three months of inventory in some price ranges, buyers are parched for new product. They will jump on fresh listings at a moments’ notice. I know agents who tell clients not to talk about hip pockets at parties lest someone hear and snatch the lead. In many inventory-deprived markets, sales are being made even before homes hit the MLS as listings in as much as 30 to 50% of the transactions. Facebook Friends here in Dallas is one of the most popular network groups of agents trading listings. Austin has Broker Underground, where Houston Association of Real Estate president Bob Hale says Austin agents boast that they are selling real estate free from the constraints of their MLS.
What are those constraints? Recording sales price is one.
There is no law that says every listing must be in MLS. NTREIS does require some sort of informed consent from it’s members, asking them to inform clients that their best possible chance for selling a home in North Texas is to list their home in NTREIS where 25,000 members will see it.
25,000 versus 45 million in Zillow. Of course, I would say those 25,000 North Texas agents are way more likely to have a client interested in a North Texas home than most of Zillow’s clients. Still, studies have shown some interesting things about listing homes in MLS.
30 to 50 Percent of Homes Sold Are NOT Sold Through the MLS in Some Areas
A California real estate research firm called CoreLogic studied California MLS listings and found that hip pocket listings comprised 26% of home sales in some northern Cali markets during the first quarter of 2013. How did they get that number? They compared public record transaction data with MLS’s in a four-county area.
While public records show 266,804 homes changed hands in those counties in 2013, MLSs reported only 174,762 transactions, or 66 percent of the total.
They also found that 9 percent of homes in those four counties during the study period were already under contract when submitted to the MLS or went under contract within three days – so likely because those homes sold quickly, they were pre-marketed before hitting the MLS. A whopping 7 percent of the listings were under contract in zero to two days, just after making it onto the MLS.
Bob Hale, president and CEO of the Houston Association of Realtors, calls those eye-opening numbers.
If you cannot beat them, join them.
Houston is Creating It’s Own Zillow-like Site, But With Accuracy
Turns out Houston is the only city in the U.S. where Zillow is NOT the most highly trafficked (or visited) real estate portal. Why? Because the HAR offers consumers more information and accuracy in pricing numbers, unlike Zillow which often has stale data — homes that are no longer listed, wacko pricing “zestimates”. So the Houston Association of Realtors has created it’s own Zillow, a beta site offering listings, sale prices, comps, property tax, school and neighborhood information for consumers. I saw the site last week at NAREE, it was impressive. The HAR.com beta site also offers a home value finder that provides property tax data, including assessed values, for off-market properties. HAR is opening this to every broker in Texas to participate in. Back in March, HAR announced it would expand coverage to the entire state by partnering with listing syndicator ListHub, a subsidiary of realtor.com operator Move Inc. This allows all ListHub participating Texas brokers and MLSs to publicize their listings on the site. In other words, one big site for the whole state of Texas. Locally, Virginia Cook Realtors will be sending listings to the HAR site.
I asked Hale if this meant HAR would no longer be sending listings to Zillow and Trulia, in effect cutting off the portals. The Austin Board of realtors stopped sending Austin listings to Zillow. Is this a way to knock out Zillow, I asked?
“Oh no,” said Bob Hale. “I want my listings on Zillow and Trulia and our HAR site, I want them everywhere. That’s how listings get sold!”
HAR is the very first MLS Realtor association to take advantage of this situation.
The pre-MLS Market has Real Financial Teeth, Especially for Brokers
Jonathan Green of CoreLogic tells us that with each 1 percent increase in transactions involving pre-MLS marketing, brokers stand to gain $250 million in (2014) gross commission income nationally from in-house sales. That’s because many of these sales are done within the same brokerage house, water cooler talk.
Off-MLS marketing of homes yields even more: each 1 percent change represents an estimated $8.7 billion in 2014 transaction volume.