What Defines a Bedroom? Neither the Real Estate Commission nor MLS Will Say

As a broker, I get to decide what constitutes a bedroom. We get no guidance or rules about that from either our MLS (REcolorado) or from the Colorado Real Estate Commission.

This week’s featured listing is a good example. When my seller purchased the condo in April 2017, it was advertised as a 2-bedroom unit, which is what the county assessor calls it. But that “second bedroom” has no window and no closet, measures only 9’ by 10’, and has double glass French doors between it and the kitchen area.

I could not in good conscience market that condo as anything other than a one-bedroom unit with a study.

I could “get away with” marketing the study as a “non-conforming” bedroom, but there are no definitions for that term, either. The term “non-conforming” is most often used for basement bedrooms which don’t have egress windows, although I’ve only used it when, for example, there was no bathroom on the same level or no door giving the room privacy.

On the other hand, I have seen basements listed as having a bedroom when the only door to that bedroom was the door at the top of the stairs. The most outlandish example I can recall was when an open loft overlooking the living room was listed as a bedroom, perhaps because there was a closet — but the nearest bathroom was downstairs. 

I don’t sense any interest on the part of the MLS (on whose Rules & Regulations Committee I have sat for over a decade) or the Colorado Real Estate Commission (to which I’ve applied for appointment) to come up with a definition of “bedroom.” As with other terms such as “raised ranch” or “garden level,” it’s left to the managing brokers (like me) or the listing agents themselves to decide how to describe the homes they market, and it’s up to buyers to make their own decisions to buy a home, irrespective of how it has been described on the MLS.

So, for what it’s worth, here’s my definition of a bedroom: It must have walls (no open lofts!), a window to the outdoors, its own door to common space, a 3/4 or full bathroom on the same level, and, optionally, a closet. The window does not have to qualify as an egress window. The closet is optional only if the room is big enough to allow for a piece of furniture (a wardrobe or armoire) that can serve as a closet. It has to be big enough to support a bed and dresser without being crowded (at least 9’ by 12’ or about 100 square feet).

It’s a judgment call as to whether a room without all those criteria should be called a “non-conforming” bedroom. I do take stock of whether the county assessor calls it a bedroom, but, as I said, the assessor called the study in my condo listing a bedroom, probably because the builder called it that on their plans. (Builders, like brokers, have their own ways of seeing things, and no one is there to contradict them.)

Buyers ask to see a listing based on its description in the MLS, and I’ve had a buyer get really annoyed when we went to see a 3-bedroom home (which was their minimum requirement) only to discover it was a 2-bedroom home. I shared that buyer’s annoyance in the feedback I provided, but that listing continued to claim three bedrooms.

Some brokerages contribute to the problem of inaccurate property descriptions by not allowing broker associates to enter and manage the MLS data for their own listings. That’s not how Golden Real Estate operates. As managing broker, I want my broker associates to enter their own listings on the MLS, and I usually will look at those listings and give my feedback or make changes directly on the MLS, which I’m able to do as their managing broker.

We have an office policy of providing maximum (not just accurate) information on each listing. That means entering data in all applicable MLS fields and not just  the mandatory ones. Many optional fields are quite important, not just useful, to buyers. These include each room’s dimensions and a general description of each room. A quick check of 71 current listings in Lakewood showed that only 13 of them included room dimensions and descriptions. A couple of them only listed bedrooms and bathrooms, not living rooms, kitchens, and other rooms. That’s because you can no longer just indicate the number of bedrooms and bathrooms, you must list each of them and the floor they are on, but you don’t need to enter dimensions or descriptions.

To me, describing the rooms is just as important as the “public remarks,” which is that one paragraph which you read on all the consumer websites to which each listing is populated (Zillow, Redfin, etc.). In describing each room, we like to list the floor covering (hardwood, tile, etc.) plus things like the view out the window, coved ceiling, ceiling fan, walk-in closet(s), access to deck or patio, fireplace (gas or wood), en suite bathroom, wainscoting, and more.  Sellers deserve no less.

Room dimensions and descriptions help to sell a home, so we owe it to our sellers to take advantage of that opportunity. It’s a shame that the majority of listing agents leave these non-mandatory fields blank.

Coming: Big Changes to Denver’s MLS

It won’t be that obvious to consumers accessing our MLS at www.REcolorado.com, but agents who login to it will need to adjust to many changes that will take effect this coming Monday, January 13th. We at Golden Real Estate are studying the 45-minute instructional video provided to us by REcolorado.

The reason for the overhaul is to make the MLS database 100% compatible with national standards promulgated by the National Association of Realtors.

Another change coming within the next couple of months is an MLS rule restricting the use of “pocket listings” and “coming soon” listings, which are kept off the MLS, often to benefit the listing agent, not the seller. In a nutshell, the rule will say that any listing by an MLS member must be made active on the MLS within one day of any promotion of the listing, which includes putting a sign in the yard, promoting it online or on social media, or in any other way. 

Look for more details in this space on the roll-out of this rule when we get closer to its implementation. This rule was mandated in November by a nearly unanimous vote of the National Association of Realtors’ board of directors.

National Association of Realtors (NAR) Bans Pocket Listings

During its annual convention earlier this month, the National Association of Realtors (NAR) voted to ban the practice of pocket listings. Pocket listings are listings which are withheld from the MLS, thereby denying other Realtors (and agents who are not Realtors) from showing and selling the listings. The rule goes into effect on January 1, 2020, but NAR is giving MLSs until May 1st to fully implement it.

Regular readers of this column know that I have long decried the practice of selling listings without putting them on the MLS. Doing so increases the chances of the listing agent “double-ending” the sale, resulting in twice the commission, but it also runs the risk of netting less money for the seller, thereby violating the ethical and legal requirement that listing agents work in the best interest of their sellers instead of themselves.

Perhaps you saw me quoted on page 10A of last Thursday’s Denver Post as welcoming this new rule. As I stated to reporter Aldo Svaldi, the only way to guarantee the highest price for our sellers is to expose their listings to the full market of potential buyers, which is only done by putting the home on the MLS. When the listing agent convinces a seller to accept an offer before their home is put on the MLS, there is no way of knowing how much money the seller will “leave on the table.”

The purpose of an MLS is to provide “cooperation and compensation.” Members of an MLS must allow (cooperate with) any other member of the MLS to sell their listing and makes it known how they’ll be compensated — in our market, typically 2.8% of the sale price.

The new policy, called “clear cooperation,” is spelled out in the following motion passed by a 91% to 9% vote of the NAR board of directors:

“Within one business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants. Public marketing includes, but is not limited to, flyers displayed in windows, yard signs, digital marketing on public-facing websites, brokerage website displays, digital communications marketing (email blasts), multi-brokerage listing sharing networks, and applications available to the general public.”

I can provide an example from my own practice. In November 2018 I listed a home for $1.1 million. Even before I put it on the MLS, a close friend of the seller said he would pay full price. The seller wanted to accept it, but my advice was to consider the friend’s offer the “opening bid” and to proceed with exposing the home to other buyers by putting it on the MLS.

Five days after putting the home on the MLS, bidding had driven up the price significantly and it sold (to the same friend) for $75,000 above full price. The seller was delighted, and so was the buyer, who only asked that his friend match the highest bid.

I could easily have made a quick commission and saved myself the chore and expense of marketing the home and managing competing offers, but I would have been violating my duty to the seller and, it turns out, cost my seller a lot of money.  I particularly like that, when all was said and done, the seller netted the full listing price, even after deducting commissions and the other costs of selling!

It will be interesting to see how this rule against pocket listings is implemented by MLSs and how effective it will be. One work-around we can expect is that listings will go on the MLS with the notation that “showings begin on such-and-such a (later) date.”

One of our broker associates, Chuck Brown, attended the NAR convention, including a panel of the titans of real estate — from Realogy, RE/MAX International, Zillow, Opendoor, Berkshire Hathaway Home Services, and others — and they, unlike the board of directors, were mostly against the new policy on pocket listings.  Zillow and Opendoor, in particular, say they’ll continue to list properties as “coming soon.”

Clearly the new rule will restrict but probably not eliminate the practice.  REcolorado’s Rules & Regulations Committee, on which I have served for over a decade, will discuss it on Dec. 10th. Expect a follow-up on this subject!