Study says off-MLS deals cost home sellers big bucks

Analysis finds MLS-marketed single-family homes sell for 23 percent more

In 2013, the average single-family home seller in San Francisco who kept his or her property off the local multiple listing service left more than $200,000 on the table.

That’s according to a study by San Francisco agents Matt Fuller and Britton Jackson of Zephyr Real Estate. After reading tips from Clareity’s Matt Cohen about how to figure out the share of “pocket listings” in their market, Fuller and Jackson decided to do their own analysis using data from the San Francisco Association of Realtors MLS and — through a tax reporting service — the San Francisco Assessor-Recorder’s Office.

Cash image via Shutterstock.
Cash image via Shutterstock.

“As Realtors in San Francisco we have a professional interest in making sure we are fulfilling our fiduciary duty to our clients. We’ve heard arguments both for and against off-MLS sales, but we hadn’t seen any data relevant to our clients and our market,” Jackson and Fuller said in the study report.

Their study found that 11 percent of overall home sales in the city and county of San Francisco last year were off-MLS. That share was 20 percent for high-end luxury properties above $3.5 million.

The study did not filter out for-sale-by-owner properties or non-arm’s-length transactions because there was no way to do so using the public records, Britton told Inman News. The study also did not touch on how many off-MLS deals were double-ended since only MLSs keep track of specific agents and companies, she added.

Other studies have indicated real estate agents and brokers are increasingly closing deals outside of the MLS, possibly due to inventory shortages. For instance, a study by Silicon Valley-based MLSListings Inc. found that pocket listings made up 26 percent of home sales in five Northern California counties in the first quarter of 2013, up from 15 percent in 2012. Another study of four large U.S. counties from CoreLogic suggested that MLSs played little or no role in nearly half of home sales in 2013.

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But while these studies highlighted the rising share of off-MLS sales, Jackson and Fuller’s study focused on the sales prices of homes listed on or off the MLS. Broken down by property type and size, they found that properties marketed via the MLS almost always sold for more money.

For instance, MLS-marketed single-family homes sold for a median $911,500 in 2013, about 23 percent higher than the median for off-MLS single-family homes, $700,000. That’s a difference of $211,500 in this high-cost market.

For single-family, two-bedroom homes, there was no difference in the median sales price between homes marketed on or off MLS. But single-family three-bedroom homes marketed on the MLS had median sales prices that were 15 percent higher on average than such homes kept off the MLS.

MLS-marketed condos sold for a median $825,000 last year, about 9 percent more than properties sold off-MLS. The median sales price of MLS-marketed one-bedroom condos was 5 percent higher than those not listed in the MLS. That rises to about 8 percent higher for MLS-marketed two-bedroom condos.

Of course, correlation does not necessarily imply causation. But Jackson and Fuller conclude that the most reliable way for sellers to get their money’s worth is to market their property on the MLS. For one thing, they say they can finally attach an approximate price tag to the decision to hold a property off the MLS and help their sellers weigh that cost along with motivations not to list via the MLS, such as privacy or convenience concerns.

“We believe it is our duty as Realtors to consult with our clients on strategies that will bring them the highest return on their investment. Based on the data we’ve seen to date, we believe that unless a seller specifically instructs us that the highest possible sales price isn’t their number one objective, the best way to ‘win’ for our sellers requires MLS marketing,” the report said.


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