The 2018 Pocket/Off-Market/Coming Soon Landscape

I wrote a post back in May of 2014 about using pocket listings to shift the balance of power away from the MLS. In it, I said this:

Everyone trying the pocket listings strategy now, such as @Properties, is doing it between agents. I think a massive home run opportunity, is to build a marketplace for pocket listings with a consumer base rather than just agents.

There are lots of details to sort out, of course. The end game, which is buyers checking app X first because of unique inventory — as opposed to any source driven from the MLS, is worth a lot of money to the portals.

Given how much activity has happened in the segment of the industry, I’m surprised at myself for not having written about the topic in any detail since 2015 (category archives for pocket listings here, and coming soon here).

In hot markets, it’s a clear buyers value things such as “insider access”, “special deals” or “exclusive inventory”. As a result, there are a wide range of both behemoths, startups, and brokerages working to capitalize on those things. I’ve spent a bit of time researching how all the players are positioned this week, and am sharing that research here today.

Let’s get to it…

Redfin

Glenn Kelman commented on Twitter that every Redfin listing has to be posted to Redfin.com , not the MLS. Beyond that, he said:

We also support policies that require brokers to market listings via the MLS, before posting those listings to another site. Our focus here is different: ensuring that brokers share listings with every site & every broker equally, via the MLS.

Where those policies aren’t in place, and brokers can post listings to portals prior to the MLS, we’ll keep posting some of our listings to our site ahead of their MLS debut, and advocating for a policy change.

We’re against the practice & ask MLSs to limit coming-soon listings, but can’t do this unilaterally. Our focus is on building a site that competes with other sites that seek coming-soon listings. Any broker can make an offer on a http://Redfin.com coming-soon listing.

Glenn, as usual, is transparent with their thinking. He knows they are competing in an open and competitive market. And, as the consumer product strategist that he is, understands the market is dictating that those with listing assets leverage them to their advantage however possible. I tried to search for pocket or pre market listings on Redfin (which they call “coming soon” just as Zillow does), and didn’t see an obvious way to do so in Seattle. However, I did a San Francisco search instead. And, bingo. Redfin supports a “coming soon” filter in cities in which they have the ability to surface that inventory. I think it was a smart product decision to hide the filter completely in cities such as Seattle.

Compass

While it’s not exactly clear what Compass’ position on pocket listings is just yet, it’s interesting to wonder whether they’ll put a stake in the ground. It’s no secret, New York City operates differently than most real estate markets. As such, it’s worth considering how Compass’ roots will factor into their long term pocket listings strategy.

I found a listing on Tracy Do’s website in the “pocket listing” category, so it’s clear they do embrace them to some degree.

That’s the extent of what I can find about Compass and pocket listings. Given their focus on the luxury and sports & entertainment market, I have a strong hunch they are very, very active in sharing off market listings internally. However, there’s nothing on their website to confirm that, and I’ll stop speculating. I hope to find out the extent of their use of pocket listings soon.

Pacific Union

Pacific Union went live with their “Private View” back in May of this year. The homes aren’t identified by address but instead neighborhood, that includes a thumbnail photo and price. Looking at their home page, they are placing a massive emphasis on their value proposition “be the first to know”.

Apparently, since 2010, about 30 percent of Pacific Union transactions have been closed off market (Inman). That’s a fairly sizable number. One thing I really like, is that at least Pacific Union is honest about what they’re doing. Nick Segal (President of So Cal Pac Union) is quoted as saying:

How do we get away from Zillow and get our market back? We can use our critical mass to make that move and do it in a way that honors everybody. We’re looking to capture that window and see what enthusiasm there is for the home in the market.

@properties

They’ve been using technology to promote pocket listings inside the brokerage for years, and appears to have productized those alters for consumers as well. They’re calling it Sneak Peeks.

The Pocket Listing Service (ThePLS)

The Pocket Listing Service was launched by high performing agents at The Agency last year, as the first private platform for agents across the country to consolidate, share and search exclusive Pocket listings in their area

From a marketing perspective, they are coming at it from a fear perspective, rather than showcasing the benefits.

If you are not in…you are out. Don’t get left behind.

They go on to say:

Perhaps most important, in a world where technology continues to render the workforce obsolete, and discount brokerages threaten, the PLS preserves agent value and significance.

Most property platforms are in the public domain. Thus diluting an agent’s ability to provide inventory to which a client does not already have access. The PLS brings the power of knowledge and exclusive information back to the agent.

However, I do realize where they are coming from (needing agent attention and adoption) and that they are not trying to market direct to consumers.

Top Agent Network

Started way back in 2010 by David Faudman as a network of verified high producing (aka top) agents, the Top Agent Network plays hidden property listings up, as a reason to work with one of their TAN agents.

Zenlist (formerly Pockelist & Merged with offMLS)

I like Zenlist’s approach to building complete inventory. Ultimately, that’s what the buyers care about: seeing all available homes. It doesn’t really matter to a buyer where the listing comes from or what the status is. Only that it’s a property that fits their search parameters and is actually available for sale.

I’ve long been a fan of their work, have written about Pocketlist (their brand before re-branding), have been impressed with my talks with Founder and CEO Tom MacLeod and am glad to have Bob Safranski (their head of product, an @properties broker, and founder of offMLS) as a member of Geek Estate Mastermind.

Zillow

Zillow launched their “Coming Soon” feature in June of 2014.  You can get a better sense of Zillow’s current positioning in their video:

I did a couple searches on Zillow to see what I could find. It’s not surprising that I didn’t find any coming soon listings in Seattle because it’s against NWMLS rules to do so. In San Francisco, there were 14 — some of which were advertised by Climb Real Estate (their CTO is a Geek Estate Mastermind member), a innovative urban focused brokerage. I’d certainly be curious to hear their thoughts on the effectiveness of that as a marketing and lead generation strategy.

Facebook (Groups)

There are literally dozens and dozens of Facebook groups to facilitate the sharing of off market listings.

Any geographic market or brokerage without a dedicated platform is more than likely using a private Facebook group.

The Downsides

Pocket listings are by nature, not public. Since the majority of listings are sold with the help of an agent, not advertising it to the MLS limits the number of qualified buyers who get a chance to see it. Which, of course, doesn’t align with an agent’s fiduciary duty to a client.

Not only are other brokers in a market not able to show possible pocket listings to their buyers, but their very existence harms the spirit of cooperation between brokers. That cooperation is a defining characteristic of American real estate. According to TREND MLS, “the use of pocket or coming soon listings may discourage and may dampen that spirit of sharing listing information, as well provide no assurance of cooperative compensation should you find yourself involved in a transaction that includes a non-MLS listing.

It is entirely possible that real estate in the years ahead will no longer follow the old rules of competition and demand. Why? Well, in a world where data scientists predict home values and investors write checks using automated software processes instead of putting a sign in the yard and hoping a house sells–maybe, just maybe, that means we have to think about absolutely everything with a new lens.

Brokerage vs Startups vs Tech Titans

There’s several categories of players. First, brokerages such as Pacific Union, Compass, Redfin, and @properties. Second, startups and independents Zenlist, Top Agent Network, and The Pocket Listing Service. Third, tech titans Zillow and Facebook.

Brokerages are clearly motivated to generate buyer leads, by leveraging one of their core assets, their listings. Even though Redfin is technically a brokerage, they are in their own category given they operate in dozens and dozens of markets, and employ salaried agents. Their solution–posting their own listings exclusively on Redfin.com before posting them on the MLS and surfaced with filters within their core search experience–is a tech solution made with the consumer in mind (read: blending all listings together, not splitting the value proposition into silos), compared to the business/service decision (read: lead generation) other brokerages employ.

Compass is operating in a range of markets as well, but they are still on the contractor model and can’t solve the agent adoption problem in quite the same way Redfin can. That said, they have a massive amount of money and a much larger operations team to handle marketing, customer service, and lead conversion than most brokerages do. Pacific Union and @properties both have a significant share of the market in their respective areas, controlling enough of the housing supply to get buyers to register to access off market listings from just their brokerage.

The startups in the bunch have the advantage of the ability to be extremely nimble and avoid the media spotlight while perfecting the model. Zenlist is mastering their craft in one market, Chicago, prior to expanding. They are taking a very consumer approach, instead of building an agent-agent network. Consumer marketing is no joke, so they do indeed have a hard road ahead.

There’s not too much publicly available about ThePLS since their launch; I’d love to know how many registered agents they have (it was 1,500 in November of 2017) and how many properties are being shared on a monthly basis. The Top Agent Network and The Pocket Listing Service are both membership/subscription business models to facilitate listings between agents, not consumers. That means user growth and attracting a comprehensive set of all pocket listings in a given market will be extremely challenging.

Zillow has the unique advantage of not having to abide by MLS / IDX / VOW rules, which gives them strategic flexibility. However, as evidenced by the fact there are zero coming soon listings in Seattle, MLS rules still impact the agents who serve as the content acquisition channel. They are also a $10 billion public company, so have the public

from theokbrowne digest https://geekestateblog.com/the-2018-pocket-off-market-coming-soon-landscape/