Reply to Selling off/pre-market with Compass or another brokerage

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]By definition you limit the pool of potential buyers.  Logically, that should lead to fewer/lower offers, due to reduced competition.  With that, time on the market might reasonably be expected to be longer.

You need a pretty compelling reason to take this route over one which exposes your listing to as many people and agents as possible.  ITts a technique which favors the listing agent and brokerage, not the client.  [/quote]

There have been a lot of these "exclusive" listings since the NAR settlement. I live around Georgetown/Burleith/Glove Park and I see these - they will have a sign out front and be posted on the brokerages website, but they won't pop up on Redfin or Zillow.

I have no idea how brokerages are convincing wealthy people to do this. It flies in the face of economic theories about maximizing the price for their clients. The only thing I can suspect is that they are offering low brokerage fees to the owner by not listing on the MLS. But even that still doesn't make any sense since they likely will not maximize their bids.

This is ripe for an economics white paper. [/quote]

The argument in favor is usually an appeal to vanity, using words like "exclusive" to suggest something unavailable to the great unwashed masses.  But, you're correct that this is not in the best economic interests of the sellers, only the agents and brokers who double dip on the commissions by keeping both sides in-house.

If someone does get an offer with one of these in-house listings, they are psychologically unlikely to reject it in favor of a more speculative, but potentially higher, later offer if the listing were more widely visible.  So these brokerages have little to lose - if they manage to broker an in-house sale they win.  If they can't, they can open the listing up later, and still profit, just not as much.  The losers are their clients who either get less for their property or whose houses stay on the market longer than necessary because the properties weren't widely advertised to begin with.  [/quote]

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