While the number of listings selling with zero days on market since a national pocket listing policy was implemented has indeed increased, the policy has actually resulted in more listings going into the multiple listing service, not fewer, according to the largest MLS in the nation.
California Regional MLS, which has more than 110,000 agent, broker and appraiser subscribers, was one of 24 MLSs included in a controversial new study released last week, “The Quiet Threat of Zero Days on Market.” That study was featured in a 5-part series published last week at Inman.com that attempted to chronicle that state of pocket listings nearly two years after the National Association of Realtors approved a proposal designed to combat the controversial practice.
The study, from the Broker Resource Network, aimed to measure the impact of the National Association of Realtors’ Clear Cooperation Policy, which requires listing brokers to submit a listing to their MLS within one business day of marketing a property to the public.
It was designed to curb pocket listings, in part due to fair housing concerns, and had an implementation deadline of May 1, 2020. For the study, BRN members pulled data from 24 MLSs comparing the number of properties sold in the MLS within 24 hours of being listed during two periods: 12 months before the May 1, 2020 Clear Cooperation Policy deadline and 12 months after.
According to the report, BRN members “immediately recognized a shift” after the deadline that was unexpected. “In every market reviewed across the United States, brokerages recognized double and triple digit increases in Zero Days On Market listings across firms of all sizes and business models,” the report said.
Only 12 of the 24 MLSs included in the study consented to have their data included in the study report. CRMLS was not one of them.
CRMLS CEO Art Carter told Inman via email that the MLS had performed its own analysis and come to different conclusions on the prevalence of zero DOM listings and how they are related to the Clear Cooperation Policy.
Carter acknowledged that the total number of zero DOM listings had risen since the policy was implemented, but said that, drawing on “a far larger and more complete data set,” CRMLS does not believe the rise is related entirely to an increase in off-MLS office exclusives. Office exclusives, where a listing is only marketed within a brokerage and not in the MLS, are a controversial exception to the Clear Cooperation Policy and are often recorded as having sold with zero days on market.
Instead, Carter, like several other MLS executives who responded to the study, pointed to the hot market as a cause of the increase in zero DOM listings, as well as to CRMLS’s implementation of a “Coming Soon” status.
“Overall market conditions have led to an unprecedented increase in offers, offers substantially over list price, and offers submitted with no contingencies,” Carter said.
“In such a hot seller’s market, many buyers make offers significantly over full price with no contingencies in the hopes of securing a property prior to broader market exposure. The timeframes to accept these types of offers are traditionally extremely short, with the goal of the buyer being able to lock down the property before it is exposed to additional buyers. Many times, these types of transactions result in zero DOM.”
In addition, CRMLS did not have a “Coming Soon” status before the CCP was implemented on May 1, 2020, which skews the BRN study’s comparison, according to Carter.
“After this date, agents could fully market a property as Coming Soon without accruing DOM,” he said. “This new status created a situation in a very hot seller’s market where buyers could make an offer without seeing a property. If a seller accepts such an offer, the listing agent would immediately change the status in the MLS from Coming Soon directly to Pending. This would result in zero DOM.
“Yet, agents fully marketed all these properties on the MLS, and secured buyers from cooperating brokerage firms using the MLS. These properties were not office exclusives, yet still show zero DOM.”
Before the CCP was deployed on May 1, 2020, CRMLS rules allowed agents to exclude listings from the MLS, fully market them and then enter them into the MLS for comparable purposed after they had sold off MLS.
“CRMLS counted DOM for these listings based on the first day that marketing occurred or on the list contract date,” Carter said. “As a result, these off MLS sales would appear in the MLS with a DOM (calculated usually based on the list contract date). These pre-CCP off MLS listings do not show up in any of the study’s zero DOM counts.”
CRMLS’s compliance department estimates that there were about 750 such properties entered in the MLS per month before the CCP, based on exclusion forms.
“With the implementation of the CCP, this group of properties are now placed in the MLS within one business day of the beginning of those marketing activities,” Carter said. “The CCP has resulted in substantially more listings coming into the MLS at an earlier stage than pre-CCP.”
The BRN study did not look at how many of the zero DOM listings were office exclusives or how many were double-ended. Like other MLS executives who responded to the BRN study, Carter took a look at double-ended deals as part of CRMLS’s analysis. He looked at every property in the city of Fullerton that closed in the study’s date range with zero DOM in order to develop some detailed statistics he believes can be extrapolated across most CRMLS markets.
Carter found that of 1,125 total sales in Fullerton from May 1, 2019 to April 30, 2020 (before CCP and before Coming Soon), 29 (2.6 percent) closed with zero DOM. Of those, 65 percent were double-ended by the same broker (19 of the 29), or 1.69 percent of all sold properties.
“Considering agents and brokers could fully market off-MLS, thereby allowing the Listing Agent to be the only agent with access to the property to show buyers, this makes sense,” Carter said.
From May 1, 2020 to April 30, 2021 — post-CCP and Coming Soon — there were 1,211 total sales, of which 67 (5.5 percent) closed with zero DOM, according to Carter.
“This percentage was higher than the previous year, which is to be expected considering the new CS status and the other factors I listed above,” Carter said. “Any property getting an accepted offer while in CS would have zero DOM.”
Of the 67 zero DOM listings, 24 were double-ended by the same broker — 35.8 percent. That adds up to 1.98 percent of all sold properties. Carter said it “made sense” that there was a lower percentage of double-ended zero DOM listings “since before our implementation of the CCP, brokers could fully market and keep off the MLS until after closing. This also makes sense considering Coming Soon status, where a cooperating broker brings a buyer and makes an offer a seller accepts while in CS.”
“In conclusion, while the number of office exclusives may in fact have increased slightly, the additional properties going into the MLS because of CCP more than offsets the slight office exclusive increase,” he said.
Real estate consulting firm WAV Group created the BRN report. Carter said he had shared this information verbally with WAV Group co-founder and BRN spokesperson Victor Lund months ago.
Lund told Inman that CRMLS’s response was “exactly what the Broker Resource Network hoped for, an opportunity to engage the industry in a conversation about the effectiveness of Clear Cooperation and the hidden threat of zero days on market.”
He noted that CRMLS’s analysis affirms that that there was a “a pretty remarkable increase” in zero DOM listings, from 2.6 percent to 5.5 percent.
Lund also stressed that “Coming Soon” statuses are currently not part of NAR’s MLS policy and therefore their application varies across the country, which means that some markets see higher increases in zero DOM listings as a result.
“CRMLS took the leadership position in adopting a policy to benefit sellers in staging their home,” Lund said. “So did many other MLSs — which is a new problem covered in the BRN paper — Coming Soon programs, when they exist, are significantly different from market to market.
“Clear Cooperation without Coming Soon is also causing major increases in zero days on market in other MLSs. Perhaps one collaborative path forward would be the construction of a national Coming Soon policy. It seems unsatisfactory that sellers benefit from Coming Soon in some markets, and not in others.”
He added, “The Clear Cooperation Policy is not broken, but it is also not finished. The industry needs to continue the mission of making sure that all homebuyers have the benefit of accessing all homes for sale though their MLS. That is not happening everywhere today.”
Editor’s note: This story has been updated with comments from Victor Lund.