Real Estate MattersInsight into the off-market real-estate clubs
by Michael Repka
The approach of the holidays and the turn of the weather often signal the end of the busy real-estate year. Buyers shift their focus to family and friends and sellers often resolve to wait until the active spring market. This makes sense. The dearth of buyers often results in homes lingering over the winter with the all-important "days on market" clock ticking away.
This year, we have seen an exceptional fall season that is more active than most. A recent listing was expecting around 10 offers despite the fact that the offers were due the day before Thanksgiving — an activity level not unique to this property despite the late season timing. Thus, sellers face the unenviable choice of coming on late in the season and running the risk of letting the property go stale on the Multiple Listing Service or waiting until spring and possibly missing out on an anxious buyer currently sifting through a spare inventory of homes available.
Historically, one option was for the seller to engage a listing agent to market the home over the winter without putting it on the MLS. In other words, that agent would inform their clients and, often, certain other top-producing local agents, of the home's availability. If one of these well-connected agents had a suitable client, the home would sell "off market." If the home did not sell, the home would be put on the Multiple Listing Service in the spring.
While this is still a good option, and one employed by many of the area's top listing agents, there are some drawbacks. First, the limited exposure may miss buyers that might offer to pay more or enhance competition. Second, agents may be tempted to first market the home to their clients in an attempt to get commission from both the buy side and the sell side, an unfortunate practice that is permitted under the DRE regulations and most brokerages' policies.
Recently, a number of off-market "real-estate clubs" have launched to connect potential buyers with properties not on the MLS. The concept is simple: Real-estate agents who join one or more of these groups have the ability to post available properties, and other agents with buyers can make an appointment to see the property.
Whether for convenience or privacy reasons, some sellers see this as an alternative to listing on the MLS whereas other sellers see it as a precursor to listing. For example, in hot markets, many sellers or their agents invest a considerable amount in getting the property ready for sale. This can range from home improvements and staging to video shoots and promotion and can take a month or more. While this work is proceeding, some sellers like to circulate word off market.
Two of the most well-known clubs in Silicon Valley are Producers Forum and Top Agent Network.
Producer's Forum: Founded in 2010 by Eric Trailer of Absolute Mortgage Bank, Producer's Forum germinated from a desire to level the playing field for all agents and clients. For whatever reason, says Mr. Trailer, some sellers want to sell without exposing the property to the public at large. Producer's Forum's goal is to get the property in front of a prescreened group of buyers. If the buyer is interested in the general details of the home (area, size, style, etc.), the listing agent can arrange a showing once the listing agent is satisfied that the buyer is qualified. That is when the client gets the particular details about the property.
Producer's Forum also serves as a database for potential buyers. Much like listings, a buyer's agent can enter in what that buyer desires and other members can reach out to them with possible matches.
A distinguishing feature is that Producer's Forum membership is open to all licensed Realtors, and as such, Mr. Trailer asserts that they reach the widest possible audience, including newer agents that tend to work primarily with buyers.
Top Agent Network: Top Agent Network was founded in 2009 by David Faudman, a successful real-estate agent, and shares many of the same objectives and benefits associated with Producer's Forum. However, Top Agent Network limits membership to agents that are in the top 10 percent of Realtors in the area. Additionally, Top Agent Network "pushes" listings out to the real-estate community whereas other sites, such as Producer's Forum, only push information if the listing specifically matches the details entered by a buyer's agent.
Mr. Faudman also points out that Top Agent Network enables member agents to share other types of resources, such as inspectors and contractors.
Irrespective of the particular club used or the application, these types of organizations can provide useful options to some sellers and should be discussed with a licensed Realtor.
Note: We reached out to the local Multiple Listing Service for comment on this story but our calls were not returned by press time.
Michael Repka, managing broker and general counsel for DeLeon Realty, Palo Alto, formerly practiced real estate and tax law in Palo Alto. He serves on the Board of Directors of the California Association of Realtors. He can be reached at MichaelR@DeLeonRealty.com.