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.

Denver’s Winter Real Estate Market Isn’t Slowing As Much As Reported

Here at Golden Real Estate, we are used to having a pretty active real estate market during the winter months, but recent news reports suggested that the market has slowed dramatically, with sellers more reluctant than in the past to put their homes on the market. Statistics show that analysis to be overblown.

Below is a chart showing 6 years of June and November listing activity on REcolorado.com (Denver’s MLS) limited to the City & County of Denver. (Further down I analyze Jefferson County statistics.) December numbers are not available yet, so I’m only showing November activity. It’s not exactly winter, but the trend over 6 years is still useful for the purpose of this analysis.

What the analysis shows is that there was in fact an increase of sales during November over the previous year and nearly as many new listings. The number of active Denver listings in November was less than last year’s peak but still higher than the four previous Novembers. Both median and average days on market were only slightly higher, and the median sold price was much higher than last November. Moreover, the ratio of sold price to listing price was even higher this November than it was in November 2018.  As for this month, there have been 384 new listings through Dec. 16th — exactly the same as during the first 16 days of December 2018.

In contrast to Denver and the full MLS, Jefferson County showed a slight slowdown in every metric except the number of sales and the median sales price, as show in these statistics garnered from REcolorado:

While the number of November closings in Jefferson County this year is comparable to previous years, the number of new and active listings this November is markedly lower than last year, and the median and average days on market are markedly higher. Despite the slowdown, the median sold price is higher—a new record for November—but the ratio of sold price to listing price is lower than all five prior years..

As for this month (through last Sunday) we have 257 new listings here in Jeffco, compared to 250 new listings for the same 15 days in December 2018, so that’s unchanged, but almost every agent I’ve spoken to senses a slowdown in real estate activity that is greater than we typically experience at this time of year.

As I’ve written before, winter is, in fact, a good time to sell a home, but it’s true some sellers continue to think otherwise. If a home is not overpriced, it can sell quickly in the winter months for a variety of reasons, the biggest one being that there is less competition from other listings, but there are countless buyers still getting alerts from the MLS, Zillow and other websites when a new listing matches their search criteria.  Sellers also appreciate that only serious buyers ask their agents to show homes at this time of year. Lookie-loos are really a fair-weather phenomenon.

Call one of us at 303-302-3636 for a market analysis, including localized winter statistics. By the way, Golden Real Estate, although based in Jefferson County, is also active and successful in the Denver market. Please consider us when it’s time to sell or buy!

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!