Shadow Inventory

New MLS rule limits public advertising

The real estate market has been red hot over the last two years. Properties frequently sell within days or hours of being listed. Potential buyers have had to keep their eyes on the internet and have a local agent on speed dial. Competition among buyers for a scarce number of listings has been intense.

This situation has benefited top agents who have a proven track record for marketing properties for those who want to sell. In the past, an agent would look at the property, put a sign in the yard, put a quick comment on social media, and then put the property into the local MLS.

Sometimes that insertion into the MLS would take several days, and savvy buyers would call the agent and make an offer before the rest of the real estate agents in the MLS system were aware of the new listing. Agents would sometimes lose buyer clients to the listing agent. Timely insertion into the MLS puts agents on a level playing field.

The National Association of Realtors (NAR) took note of this problem and created a new rule (Clear Cooperation) that, within 24 hours of any public marketing of a property, the listing must be inserted into the MLS. This would allow more agents, and potentially more buyers, the opportunity to make an offer on the property.

This sounds on its surface like a great policy, but it does handicap a segment of the business. Many property owners who value their privacy do not want to place their property into the MLS. Under the new NAR policy, an owner who desires anonymity may list with a brokerage as an office exclusive.

Under this policy, public advertising, sign placement, direct mail, social media, and other advertising may not be employed by the brokerage for an office exclusive. As soon as those tactics are employed, the broker must submit to the MLS where they participate and share business. The property is listed, but marketing is via the agents in the brokerage talking to their clientele about the property. One might call that “office exclusive” listing, Shadow Inventory.

What must buyers do?

 While most people utilize the MLS, there is a significant number of properties that are in “the shadows.” Some sellers are testing the waters while they look for a replacement property; some owners are waiting for repairs and/or professional photography, and some want only qualified buyers instead constant tours coming through.

That means that at any given time there may be several dozen properties that are in an office exclusive category in our market. Our advice for buyers is to reach out to firms that have a long history in their target market and have a significant market share. Sellers will look for the same firms. Ask an agent there to let you know about any property that might be an office exclusive. You might be surprised to find your dream lake home is just off your radar.

Our Sales Executives work hard to stay abreast of the market. If you want someone to help you find the perfect lake property, call them at 256.215.7011.