Pocket Listings: Smoking gun outs conflict of interest in real estate

 
opposingteams

The first round of Real Estate is Broken, a hard-hitting agent-to-agent critique of the residential industry last week in Boston, began with this one-two punch:

“When I grew up in the industry, pocket listing was a bad word; now Zillow has a category for pocket listings called ‘Coming Soon.’”

That rant echoed a headline three months earlier in Inman News that predicted, Zillow’s new ‘coming soon’ feature puts pocket listings on steroids.

Given Zillow’s scale and market penetration, it’s not hard to imagine that “Coming Soon” will institutionalize a two-tier housing market: pre-MLS listings and active MLS listings. Like pocket listings that are shopped in-house at company meetings as described below, “Coming Soon” will pressure homebuyers into dual agency and designated agency relationships so they don’t miss their “dream property.” (And brokerages get to collect both sides of the commission.)

Think we’re exaggerating? Read this “smoking gun,” an excerpt from an email sent to one of our buyer agent referrals:

“If we do not sign “dual agency” I believe that we are doing you a disservice. Let me explain why. Our office has approximately 70 agents, we meet for weekly marketing meetings, we discuss our buyer needs, and many times an agent at the meeting has a seller who is then contacted and a deal is put together. This is before it has ever hit the “open market” or MLS. By us not being able to use dual agency we would not even be able to promote your needs at our company meeting!! I am willing to not personally represent you and a seller if that makes you more comfortable, but I think that if you don’t even want me to represent you if anyone in my entire company has a listing, then you may very well miss out on your ‘dream property’.”

If pocket listings result in class action lawsuits someday, as Sam DeBord posited in his column on January 22, 2014 in Inman News, think the explanation above meets the legal test of “informed consent”?

http://bit.ly/PocketLiability (please share this URL via social networks)

Rather than manipulating buyer with fear of loss, what if the law required agents to record themselves as they explain risks or loss of benefits of agency options before buyers or sellers give up their right to be represented by their own agent, without conflict of interest?  Think many agents could provide sufficient information to obtain informed consent — Or is the industry so immersed in conflicts of interest that they see nothing wrong with the picture above?

Or what if the tables were turned and homebuyers present their own contract terms which agents could accept — like the Pledge of Allegiance authored two decades ago by the State of New York.

http://www.caare.org/PledgeOfAllegiance (please share this URL via social networks)

Or better still, what if buyers and sellers could simply exchange their own IntentCasts pre-MLS and involve agents if and when they want, at a price the consumer sets?  To some extent, that’s already happening with and without the benefit of technology.

Those are among the Idea Starters in our reVRM-Minifesto, a vision of an open ecosystem in real estate by 2020.  If you’d like to cocreate that future, follow #RE2020 or contact us to begin meeting on and offline.  You can help simply by sharing this URL via your social networks:

http://bit.ly/SeedRE2020

Posted in Bidding wars, Buyer agent, Consumer protection, Defensive Homebuying, Designated Agency, Dual Agency Detective, IntentCasting, Pocket Listings, RE2020, VRM, Whisper listings

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