When you purchase a home, it’s inevitable that you lose some privacy. Property purchases become public record and most counties in the United States make databases of these purchases available on their local websites.
This is the reason that celebrities and high-profile buyers like politicians and the very wealthy frequently purchase their personal property in a limited liability company. LLCs aren’t foolproof in shielding personal identities because of new laws designed to disclose who the actual buyer is in an attempt to curb money laundering. But for the average curious neighbor, it does make it a little more difficult to determine who, exactly, is the real owner.
So how does the desire for privacy impact the current shortage of available properties to purchase? Well, an old real estate tool called a pocket listing is becoming very popular again. A pocket listing is a property listing that is not placed in the local multiple listing system for any broker to show to their clients; rather, the listing agent and their broker keep the listing in-house, showing it to a small group of potential buyers.
Although there is nothing illegal about this way of marketing a property, because of the increasing number of brokers using this method, the National Association of Realtors adopted a rule last year aimed at discouraging its use. The new NAR policy requires agents to add a listing to their local listing service within a business day of publicly advertising the listing. However, listings can still be kept off the database if they are only shared within one brokerage, essentially an office exclusive.
Small, independent brokers argue that this gives a huge benefit to big brokerages that can make properties available to a larger number of in-house agents.
This is starting to affect the number of properties available for sale in an already low-inventory market. In Tampa, for example, the proportion of estimated pocket listings rose to 6.1% from 4.4% two years ago.
The argument against pocket listings is, of course, that buyers do not have all of the properties on the market available to them, pushing the prices up even more for the remainder of listings.
The argument for pocket listings is that sellers who prefer a more private choice when selling their home have the option of pre-qualified buyers who have already been screened. Pocket listings also eliminate some of the frenzy that is defining this market with bidding wars and dozens of showings.
The National Association of Realtors reports that home sales fell 2.7% in April from March and that April was the third straight monthly decline – the longest since last spring. In addition, the median single-family home price nationally jumped to $341,600 in April, the highest on record. Manatee County also experienced the highest median sale price on record for the month of April at $405,000.
I see it both ways. Sellers should be entitled to list their personal homes any way they want in order to maintain their privacy and sanity. However, when you look at the numbers, you can only feel for the poor buyers who are not only working against cash buyers, low inventory and high prices, but now with private listings increasing, having even fewer properties to tour.
Unfortunately, things will only get worse before they get better. Sellers want to maximize the profit in their property while still keeping their privacy, and buyers are at a loss of what to do next. What a year. Stay safe.
