Do You Always Need An MLS Listing To Sell Your Home?

Posted by Steve Vincent on Sep 4, 2013, 8:57:28 AM

In pocket listing, is mls necessary, mls listing, saving commission, Sellers

There is a little controversy right now about the concept of a 'Pocket Listing.'  There have been a number of recent news and opinion pieces, mostly from Realtor groups, condemning the practice of keeping a salable listing out of the MLS.  Before I tell you what I think, let's examine the Realtor point-of-view.

Since the advent of the MLS, the residential real estate business has operated on a cooperative basis.  Because most MLS membership agreements require that every home listed by a member broker be offered for sale with an MLS listing (unless the seller signs an op-out waiver), every Realtor has an opportunity to sell any property listed with a competitor and earn a portion of the commission.

This is marketed as being in the best interest of the seller because it maximizes the opportunities for exposure of the home, getting it in front of more and more potential buyers through their individual agents. And after all, whether another Realtor comes in with the buyer or the listing agent finds the buyer him or herself, the cost to the seller will be the same; it won't cost any more.

And that's where the problem lies - the presence of a second broker (buyer side) does not increase, nor absence of same, decrease the sellers cost.

In general, when a seller lists with a traditional broker, s/he agrees to pay a percentage based commission.  The actual percent varies, but will often be in the 5% - 7% range.  Let's consider something right in the middle, say, 6%.  On a $250,000 home, that's a $15,000 commission!  Huge, right!?  But one of the reasons it is so high is the listing office has to be prepared for the likely event that an outside broker and agent will bring the buyer - and, generally, they'll be paid half of that commission.  Of course, if there is no outside broker, if the listing broker finds the buyer his or herself, the seller still pays $15,000 because . . . well because that's just the way it's done!

At GreatNest we don't charge a percentage based commission, we charge a Low Set Fee.  And, we unbundle commissions.  If there is no outside broker involved, you don't pay for one.  Now that's a real benefit to a home seller, one you can put a dollar sign on!

My opinion? I don't think this needs to be an either/or question. How about flexibility? In fact, how about exposure AND flexibility? Why not give the seller the benefit of an MLS listing, but not insist they pay for the efforts of an unsuccessful outside broker? By unbundling the commission we ask the seller to pay only for the efforts of a successful broker.

The truth is this controversy is not about saving the consumer money. It is not about lowering the cost of the average real estate transaction. Instead, in general, it is about brokers not wanting to share their commissions in an improving market. Perhaps it's also about stifling competition but that's a story for another day.

Until the market is 'superheated' I believe an MLS listing makes sense so long as the seller is not expected to pay as if an outside agent was involved if they are not. If our market continues to improve there will come a time when an MLS listing is just one option. Not so that we can hoard the commission, but so the seller can minimize their cost.

At GreatNest, we are about two things:

  • Getting your house sold for top dollar
  • Saving you the most money in commission expense

We will consult with you at the time of listing and continuously thereafter about how best to market the home, whether an MLS listing makes sense or not, and how to maximize your savings while selling for the greatest possible price.