Profile picture for user1918624

Selling Home PRIOR to LISTING IT ON MLS

We are in the bay area, CA in a very hot market.
Our agent devised a plan to sell our home by first sending out a mass email the first week. Towards the end of week 2 we would list in on MLS, have an open house that weekend, and take offers.
After sending out the mass email ("1000 of prospective agents")BY the second day of the email we have an offer of 30% down and 25K over list. (The houses in the same footprint in our area have been selling for at least 625K).

Should we take this offer or wait till it is on MLS then review the offers. As a side note he is BEING REALLY PUSHY about taking this first offer of 650K. The agent of the buyer is from the same real estate brokers office, so I am wondering if there is some sort of incentive for them. He says the buyer may get upset and retract it if we do the MLS listing and the open house. However this is a hot market and I want to make sure we get the most bang for our buck.
  • March 14 2014 - San Jose
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Answers (26)

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Profile picture for Dan Tabit
User,
In response to your last update.  Countering the offer at $675k, while keeping it off the market can still limit the full pool of available buyers.  One strategy we see here daily is a statement in the "agent only" section in our MLS "Offers, if any, will be reviewed on (specific date usually after a weekend).  This allows the entire market for your home to be aware of it online, tour it over the weekend, do at least one open house and bring in their best offer. 
If your buyer is still interested, they can compete with everyone else.  It's also not just price.  Buyer's who have missed out on some homes will pre-inspect, often waiving this contingency.  Others may waive the financing or appraisal contingency.  The less contingent of offer you receive, from a fully qualified buyer, the more secure your deal will be.  Selling isn't the problem for you, getting the right price and terms are.
Please, put your home on the market and allow the full system to work in your favor. 
  • March 15 2014
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Role of thumb:  Your first offer is usually ----- usually ------ your best.  As long as all the homework was done to price it according to market value! 

  • May 09 2014
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hi, you made a wise decision by listing your home on the MLS thus giving it broad market exposure, rather than selling it off-market...good luck!
  • May 01 2014
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Talk with the realtor you're working with first.
  • March 22 2014
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I would delay the decision until after 1+ week of showing on open market. Your agent is worrying offers from other agents will reduce his income. I would also encourage backup offers to ascertain you have a fallback plan.

Sam Shueh
Keller Williams Realty
  • March 22 2014
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Dear User, 

Trust and integrity are the most important things in the relationship between you and your agent. You have to be able to trust that your agent will follow through and proceed in the manner you have chosen. Do you still trust your listing agent? 

 Although I have seen many excellent agents send out advertisements of listings not yet on the MLS, and this is a common practice, I (thankfully) do not see or work with agents who so vehemently work against their client's wishes. You have already made clear that you would like to have the property listed on the MLS, that should be the end of the discussion. 

By not listing your property on the MLS, your agent is potentially depriving you of possibly higher offers with better terms. As Dan Tabit has stated, countering the one offer from the same office at $675K but keeping the listing off the market will still not guarantee that $675K is the best and highest offer for your listing. The only thing that would guarantee is that no one else would be able to compete for your listing. 

If the buyer is truly interested, they will compete for the listing with other potential buyers. Price is not the only issue here. If there is an appraisal contingency on the current offer from your agent's office, what would happen if the appraisal value is lower than the sales price? What other contingencies does the buyer have? Is this agent and broker looking out for your best interests, the buyer's best interests, or the agents' best interests? 

My specialty is the South Bay Area, and I know that home values are still going up, up, up. Please proceed with caution, list the property on the MLS, and if you are uncomfortable with your listing agent, it is time to explore other options before you enter into a sales contract. 

Best wishes to you. 

  • March 19 2014
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There's no reason why you can't collect offers and take the highest and best offer.  The MLS should open the "floodgates" for every Realtor with good buyers to present you their offers. This would be the smartest move in my professional opinion

In this market, there's really no telling how high your offers might go.

In my area (West Los Angeles) one home listed for 825,000 had 49 offers the first day on the market, which went to counter offers.
Out of the counters there were 6 that came back, two of them were over One Million Dollars!

 When both agents are from the same Brokerage, that is called "dual agency" even though they are each representing a different person..they both work for the same broker.
This is legal in California as long as all parties are aware and consent.

The only incentive would be that the Brokerage would get a percentage from both Realtors on the sale, or double the normal amount.
You are the client, and your Realtor works for you so make the decision you are most comfortable with.
  • March 16 2014
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Profile picture for user1918624
One more thing: Can someone explain what a double office commission and details or example? I can surmise it is when a buyers agent and sellers agent work for the same broker and get the commission and an incentive for that but how exactly does that work? As a side note we are offering the buyers agent 3% and sellers agent 2.5 (discounted so we can use the same agent when we go to buy) Hope that makes sense.
  • March 16 2014
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Profile picture for user1918624
After having a discussion with our agent, we advised him we want to list it on the MLS. Plan is to make flyers and market on Tues List on MLS Wednesday. (< days on MLS fresher the listing) Open House Sat/Sun. Review offers on Wednesday of the following week. I did ask him if he gets a "referral fee" and his response was absolutely not. He also mentioned the buyer may not be interested in a week and move on, which is a chance we are willing to take. He still thinks we are taking a big risk by not taking this offer, as he pointed us to the MLS with comps that are sale, they are on sale for the 600-625 range however each property is so unique (upgrades/cross streets/age and condition of home etc..) And they HAVE NOT CLOSED YET, I still am sticking to my gut, and posting on MLS. I will keep this forum posted on what happens. Again thanks for the input, its invaluable.
  • March 16 2014
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Profile picture for Teri Arbogast
I think you should put the home on the MLS for at least one week. Hopefully you will get multiple offers. This will motivated the buyers and you will have the upper hand if , after inspections, the buyer asks for repairs credits.
  • March 16 2014
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Profile picture for sunnyview
I would refuse the offer and put your home on the MLS. Your market is red hot. Take advantage of the open competition. Your agent wants to offer your home to his officemate and to his broker as a double office commission. However, you do not have to agree to the first offer, so don't. 

Before you even counter, I would also ask for a brand new CMA including all houses that are currently under contract and all new listings. Then decide if the offer is really rich enough of not to pull the listing.

My gut says you'll net more offering your house to the open MLS and I suspect your gut feeling is the same. 
  • March 16 2014
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Profile picture for Sandykayhomes
The DRE added an addendum which is now required in our area. That addendum is called
"Seller instructions to exclude listings from the internet" which is required to be signed by the broker of the office and submitted to MLS listings with any listing contract if the property is not put on MLS and opened to the public. This is an important change to our rules and a violation of MLS rules if it has not been signed

The value of selling a property off market varies : sellers may not want the hassle, people going through their home , they are not really ready to sell the property and are checking the market or simply want a fast sale.

In any case the seller is required to submit all offers received to the seller but the catch 22 as a buyers agent is that we have no way except a tedious process of ever finding out whether the offer was ever submitted to the seller.  It tends to put a lot of power and need again as said many times here of trust between seller and agent.

This offer may be a great offer and perfectly legal. As the seller you are in control of what you sign and when. As in all good relationships the best way of resolving the relationship is talking it out between the two parties listing agent and seller. You also have the right to ask that the broker of the office sit in on the discussion.

I am reminded of when I had to solve a plumbing problem at my mothers house and she would always say "so and so solved their problem this way". Yes mom, but that was a different house.
  • March 16 2014
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Profile picture for AdrianChu
This is commonly referred to as pocket listing and is not allowed by the NWMLS in the Seattle area.  I would recommend you have this listed on the MLS, because chances are you will be able to fetch an even higher price when the property is given the deserved amount of exposure to other agents in the market.

Best of luck with your sale!
  • March 16 2014
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Here in Seattle, for the most part, we have "pretty much" eradicated Pocket Listings. There is no academic defense for the position that a Pocket Listing will net the seller as much as exposing it through the MLS.

I can tell you that this is how real estate used to be practiced, before the MLS. An agent would find out about a willing seller, and they'd tell everyone they knew, and if the price was attractive enough, there'd be an offer or offers. The entire idea behind an MLS is that there are so many agents that are working with buyers who will never know about the availability of a property, that it is in a seller's interest to have the property "listed" with the MLS. Not to mention that a broker can (usually) sell it much faster through MLS co-operation than on their own!

So, that's what you're faced with. I don't know what you should do; market theory proclaims that the wider your audience, the more likely you are to get a better offer, and sometimes the best offer is actually close at hand. I have been on St James Place and rolled the dice and landed on Free Parking, so it does happen!

All the best,
  • March 15 2014
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Profile picture for user1918624
So the term is called "pocket listing"
  • March 15 2014
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It is difficult to discuss specifics with you because we don't know your market or the details on the particular offer but...why would anyone want to limit their exposure by keeping a home out of MLS? The whole idea is to expose the home to as many potential buyers as possible and heighten the opportunity to receive the highest offer.
  • March 15 2014
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Profile picture for user1918624
Thank you for your input. Now to address some of the comments; 1. We found this agent through yelp. After interviewing a couple of other agents we thought he would be a good fit. Not so sure anymore. 2. The comparative market analysis which was presented to us by another agent: refined value 629,914; comp analysis 627,660 comp analysis range: 580 to 651,942. 3. He has not had the opportunity to present the offer to me in detail yet. What he has said is that of the 3 agents who have shown the house, 2 are not interested b/c the house is small. Again he is emphasizing that we should go with the strong offer of the 3rd agent, in the event it falls through we can still list on MLS without having the clock tick. Mind you only 3 agents have come through our place, total. One strategy I can think of is to counter for 675, all contingencies waived including the appraisal contingency. Thoughts? OR do you feel that it would be just wise to list it and let the MLS do its thing.? As I have mentioned we are in NO rush whatsoever.
  • March 15 2014
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Profile picture for Dan Tabit
While there can be issues with an appraisal, someone who wants a house, has the means will ignore or overcome an appraisal.  I sold a home last year with several offers waiving the appraisal contingency. I never found out what the buyer's appraiser said it was worth, but my seller got 116% of our list price and all contingencies were waived.  A great agent in a hot market will work the terms to your advantage. 
  • March 15 2014
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Hello,

If you are in no hurry,  the market is hot and you already have a offer over list when the home is not even in the MLS,  why not wait?  Typically the first offer most likely the best offer - but your situation is much different.

I'm assuming your agent did a comparative market analysis to come up with the list price.  It might not be a bad idea to have an appraisal done to ensure your list price is in line.  It is true unless you have a cash buyer - no lender involved - the home must appraise for at least the purchase price. So price according but don't worry, you don't have to disclose the appraised value to anyone - even your agent.

Remember - in that market there really are cash buyers out there!  Cash is king!

Best of Luck!  

  • March 15 2014
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Profile picture for kelliv
When you selected this Realtor, did they come by referral?  Do you trust them?  That is the most essential aspect as no two real estate transactions are the same. There have been instances where someone in my office has a buyer that has been looking for exactly what I just listed and they are willing to pay top market value or above to get it and work with a professional that they trust.   However, "ONE BAD AGENT, can spoil it for the whole bunch"..... there are those that use this method as a form to get inside deals for their own clients/co-workers. Which in of itself is not the issue, the issue becomes; "is this TOP MARKET DOLLAR for the seller?".   The only way to know that is by placing the home on the market so EVERY buyer has a chance to "bid" on the house.  You can look at comparable sales (comps) to see if you are at the top of the market but that doesn't necessarily mean that you sold at the peak.  After all, Comps just guide you but market value is simply; "What a WILLING and ABLE buyer is willing to pay and what a seller is willing to sell for."  Comps come into play if the buyer is relying on financing as the appraisal could kill the deal if the buyer is willing to pay more than market value if they don't have the cash to contribute.    However, that being said, this is why you hire a professional that you can trust as they will go over all of the information with you.  
  • March 15 2014
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Profile picture for Sandykayhomes
Internal networks are not uncommon in big agencies and there is no incentive likely for the individual agents other than that the company likes the double commission. If the agent is referring a client to the agent in the office and getting a referral fee from the second agent it is your right to know this.

Overall the very most important thing is "does the value of the buyer exceed the value represented by an accurate market analysis of the property?." As rents have exceeded mortgages there is an extreme number of buyers looking for a purchase and prices are escalating higher than expected values, properties are not appraising and buyers do need to pay over appraisal and know that.

If you really want to TEST the market for the highest price than going on the market is a good idea however statistically the first offer is sometimes the best. Also there is NO reason why you have to take offers after the first open house. The best buyer may not be around that weekend.

Hurrying is not necessary. Just take your time, talk to your agent about the facts and proceed methodically down a path that works for what you believe to be true. The specifics of the actual sale are really only supposed to be discussed with the listing agent who you should trust. If you do not trust him than that's another problem entirely
  • March 15 2014
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Profile picture for user1918624
We are in no rush to sell, in fact if we aren't able to get the min 650 k we would not sell and not loose any sleep. His argument is that the house will not get appraised for 650, so with this offer, we would not have to deal with the deal falling through. ( as a side note are mortgage refinance appraisals different then purchase appraisals, when it comes to the appraised value I tend to be skeptical but either way y'all advice about waiting makes way more sense. Aside from that, giving everyone a fair shot sounds more ethical to me.
  • March 15 2014
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Profile picture for Tony Ngai
He may offer his professional opinion, but the final call, would be yours to make.  As a side note, looking at 2013, the best prices are from May through September.
  • March 15 2014
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It depends, are you on the hook to sell right away?  Can you wait and maybe get a bidding war going?
Talk it over (the owners) where are you at? Would the 25 or 50k more make a difference, will it cause unbearable stress waiting? Can you afford to wait...
These are all questions you need to ask yourself.  Relax,the ball is in your court, you have more than asking.  OH, Is the buyer pre approved for the loan?  Are there any contingency's?
If all cash offer or a fully approved buyer, in my book is better than a full price or even an increased offer if the the offer is contingent on this or that, with regards to the buyer coming through with the cash.  How long is the escrow period the buyer is asking for?
The last thing you want happen is to get in escrow and the deal tanks.....;/

 ALOHA

 
  • March 14 2014
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The general consensus is that you are more likely to maximize the amount you receive for your home by putting it on the MLS, hold open houses and do everything possible to get as many multiple offers as possible. An off-market offer can be attractive if 1) it is an offer you can't refuse, and/or 2) there is some value to you of not having to hold open houses for a weekend or two.

The offer you mention is 4% over list. Not bad, depending on the area. Look at a list of recently closed sales and compare the list vs. sold price to determine how "happy" you should be with a +4% offer. In the Mountain View area, we are seeing 10% and higher, so 4% looks ok, but probably not worth passing on giving the MLS a try, i.e., nothing to lose, especially in this Seller's market.

As to your Agent, he should be providing you with your options and doing whatever you choose. There is some chance that he is getting a referral fee from the other agent. If so, then he might have a financial incentive to "push" you in a particular direction. Ask him directly. If you don't like the answer, then ask the office manager/broker.

Last resort, your Listing Agreement is with the brokerage firm, not the individual agent. Therefore, you could ask for a new agent and not break your agreement. If it gets ugly, most brokerages will agree to cancel the agreement in order to project their reputation.
  • March 14 2014
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Profile picture for Dan Tabit
Personally I despise this practice and it is against the rules in my MLS.  You only get top dollar and the best possible terms for a home when it's exposed to the broadest possible market. Your agent is keeping other agencies out of the running for your home and trying to look out for his companies interest over yours, or at least that is how it appears. 
There could be a cash buyer for even more just waiting, but because they are using another office, they will miss out and so will you.  My suggestion is either get your home on the market now.  Give the full system a chance to do what it's designed to do.  If homes are in short supply, your current buyer won't have other options and will be forced to compete like everyone else rather than have an inside shot.  
  • March 14 2014
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