In the past we’ve written about exclusive real estate listings, which are homes for sale that are not being listing on the local real estate boards Multiple Listing Service (MLS). Such homes are considered to be exclusive listings and while they may have a For Sale on the front lawn, they may not, and neighbours may have no idea the home is even for sale. There can be good reasons as to why an exclusive listing makes sense but in many cases, listing on the MLS system makes a lot more sense.
While exclusive listings have been around for quite a while, there are now new rules around how such listings work and that will have a dramatic change on the number of such listings. Spoiler alert, you’ll see far fewer exclusive listings moving forward.
Let’s review what’s changed and what it means!
Those are some mighty exclusive pockets.
There used to be no restrictions around exclusive listings. Whether they were called private listings, pocket listings or something else, it all really meant the same thing – if they didn’t go on the Multiple Listing Service, it was an exclusive listing.
Whether it was through For Sale signs on the front lawn with an “EXCLUSIVE” rider at the top of the sign, private realtor-only messaging groups, or email blasts out to a database of thousands of agents or prospective buyers, only one thing was consistent – it wasn’t on the MLS.
Apart from that key aspect, exclusive listings varied tremendously. They could have marketing packages that rivalled what you would see from a listing on MLS, or they could have absolutely no marketing at all. They could offer a co-operating brokerage commission similar to the norm in the area, or they could offer something radically different. They might sell to someone the listing agent knew, so no other agent was involved, or it might involve both the listing agent and a buying agent.
It really was simply an alternate approach to selling real estate that some sellers decided they preferred. Within our team, we’ve had a number of exclusive listings over the years and in each case, we’ve had a frank conversation with our seller clients about the pros and cons of each method. As of January 1, 2024, those conversations look quite different.
You there, co-operate!
At the start of 2024, many real estate boards across the country implemented a changed approach to exclusive listings. While a few did it in late 2023, most boards waited until the new year to make the change.
This change was instituted as a result of the national associate of realtors, the Canadian Real Estate Association (or CREA), putting into effect a new Article in the national REALTOR’s code. Entitled the “Duty of Cooperation” (Article 30 of the REALTOR® Code), the Cooperation Policy requires real estate agents to place property listings on an MLS® System within three days of public marketing, unless an exemption applies. The new policy will also require disclosure of the date in which the property will be published to the MLS® System.
The big change is the addition of this three day rule. Prior to January 1, 2024, an exclusive listing could be exclusive for as long as the listing agent and the seller wanted. A property could be listed exclusively for days, weeks, months or even years, with no requirement it ever go onto the MLS system.
Now, once an exclusive is publicly marketed, the clock starts ticking and within three days of that beginning, it needs to go on the MLS system.
So, what’s considered public marketing?
Public marketing means any marketing to the public or anyone not directly affiliated with the listing brokerage/office, excluding one-to-one direct communication.
In the past you could see a For Sale sign on a front lawn with an exclusive rider for weeks or months, you could often go to a section on real estate brokerage’s websites where they promoted exclusive listings and agents could and would message every agent they knew about a new exclusive listing. If a listing agent wanted to take out newspaper ads or social media ads for their exclusive listing, they could.
As of January 1st, any of the above examples would start the clock ticking on the three day rule and by that point, the exclusive listing would need to go onto the MLS. A real estate agent can still discuss their exclusive listings within their brokerage, or call other agents on a one to one basis, but everything else counts as public marketing.
Why the change?
The question that was asked by many real estate agents in the months leading up to this new rule was simple – why the change?
The official answer from CREA to that question is as follows.
MLS® Systems facilitate increased exposure of listings to a broad group of REALTORS® and their clients, benefitting both sellers and buyers. From a seller’s perspective, a listing with exposure on an MLS® System may increase the number of offers received and improve their chances of receiving the most competitive offers for their home. From a buyer’s perspective, they benefit when their REALTORS® have access to a more complete inventory of homes for sale that may meet their needs. From a REALTORS® perspective, efficient and effective cooperation through MLS® Systems maximizes opportunities for REALTORS® to bring together home buyers and sellers.
Our unofficial take on it is that exclusive listings were damaging to the public’s perception of real estate agents.
During a hot market, buyers would grow frustrated at seeing homes sell in a desired neighbourhood without ever being publicly for sale. It created a perception that real estate agents were creating a shadow or hidden market where ideal properties were kept from the public at large. While this may not be 100% accurate, it did cause frustration and an increase in confusion amongst the buying public.
The other way it damaged the reputation of the real estate industry had to do with any incidences of exclusive listings that somehow took advantage of the seller of the listing. A risk of selling off the market (and an exclusive listing is, by definition, not on the public market in full) is that you don’t get paid market price. Consider an aged seller who was convinced by an unethical real estate agent to sign an exclusive listing and then after weeks or months of no activity, accepting a low priced offer because that’s what “the market” would pay for the home. Even worse, what if the real estate agent offered to buy it themselves at a price that was lower than the market would have paid? A terrible situation that, while rare, could occur under the old rules.
Is it a good thing?
In our experience, many ethnical, good agents found the change to be relatively benign. If you are representing your seller client’s best interests, there are relatively few situations where a lengthy exclusive period makes sense.
Since the new rules came into place, we’ve represented a few sellers who appreciated the benefits of an exclusive listing, and we found the change to not be impactful.
- We were still permitted to share the exclusive listing within our team and the 150 active agents in our brokerage.
- We could still call agents we knew who might have a buyer interested in the exclusive listing.
- We could still do a brief exclusive marketing period in that three day window where we felt out a large group of agents about the listing and our price before we went onto the MLS system.
In short, we consider the change to be a good thing. Ethical agents who look after their client’s best interests won’t find it negatively impact their ability to sell the home for a good price and any agents who were trying to use the secrecy of an exclusive offer to somehow benefit themselves or another party to their seller’s detriment can no longer do so.
As real estate rules change, it pays to work with agents who understand the new rules and know how to make sure you continue to be well served. If that sounds like something you agree with, get in touch with us to talking about buying or selling!
