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 1^st, 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!

In the real estate industry, the term “exclusive” has a very specific meaning.  While the vast majority of homes are listing on the local real estate boards Multiple Listing Service (MLS), there are some properties that are for sale but do not get listed on the 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.  Such listings are relying not on overall market exposure, whether it is through people browsing Realtor.ca or driving by and seeing the sign, but on their listing agent marketing the property to an exclusive list of individuals.

Given the length of time we’ve been working in real estate in our team, we have literally thousands of agents who we have interacted with over the years.  Almost every day we receive a number of emails from agents promoting their newest listings, some of which are exclusive and not on the MLS system.

One question that we’re often asked is why a seller would choose to forego market exposure and list their home for sale exclusively.  There are, in fact, a few good reasons why it may make sense to a seller to decide to go this route.

Privacy

When you list your home on MLS, privacy pretty much goes out the window.  While in theory you can restrict the address for the public facing MLS (i.e. realtor.ca), it drastically limits the interest in your property if a potential buyer can’t see where exactly the house is located.  If you ever see a listing on realtor.ca where it doesn’t state the address, it is because the seller has decided against providing it.

In the vast majority of cases, properties on MLS have their address listed and if they want to actually attract buyers, they included a number of photos including the exterior.  Virtual tours are very common and a properly prepared listing on MLS includes floorplans, measurements, details on any updates and renovations.

All of these things that are done to make the house sell quickly require the seller to give up privacy.  Anyone with an internet connection can see their furniture, their design choices, what they have done to keep up the house and what they haven’t done.  It is taking a very private space – your home – and making it very public.

Some buyers choose to list on an exclusive basis because they want to keep a modicum of privacy.  They don’t want just anyone to see their home.  By listing it exclusively, the seller and their agent control who sees the home and when, as opposed to an MLS listing that is subject to the rules and regulations enforced by the local real estate board.  These include availability for showings, length of the listing period and so forth.

Lower Commissions

When an agent signs an exclusive listing, they generally undertake to find a buyer from their connections rather than the general public.  By its very nature, such listings are more likely to result in no other Realtor being involved.

When a listing agent brings their own buyer to the table, there is often an agreement that the commission being paid will be lower than if another Realtor is involved.

The discount is agreed upon between the seller and their agent and could reduce the full commission from 5% to 4% or even 3.5%.  This can result in significant savings on the commission paid.

There is a strong debate as to whether the lower commissions paid come at the expense of a lower sale price due to lack of market exposure and therefore fewer competing bids on the property.  The vast majority of exclusive sales involve only one buyer making an offer and we rarely see multiple offers on exclusive listings.  They just aren’t designed to foster that situation, unlike MLS listings where a greater pool of potential buyers increases the changes of more than one offering party.

Testing the Waters

In some circumstances, exclusive listings are used as a precursor to the public MLS listing.  When sellers and their agent are debating listing price and strategy, an exclusive listing allows the home to be marketed to a select group and to test the results.

Such a strategy can pay dividends in multiple ways.  If the listing receives strong interest from a number of people who view it during the exclusive phase, it is likely that listing on MLS at that price will cause a great deal of interest and multiple offers.  If the listing doesn’t elicit much excitement or interest, then the price, photographs, staging and overall strategy can be adjusted to deal with what is causing the lack of interest.

In either case, the seller has the opportunity to test the waters without having a permanent record on MLS.  There is only one opportunity to make a first impression and if a seller or their agent take the wrong approach, the listing can be perceived as stale or stigmatized in some way, resulting in fewer offers, longer time on the market and a lower eventual sale price.

When we discuss exclusive listings with our seller clients, we go through these three reasons why it may make sense and review their particular situation.

While privacy concerns are legitimate, it is a matter of how much your privacy is worth to you.  We have had some clients who have a sale price in mind that would make them happy, who were pleased to sell at that price and not give up their privacy.  For many others, while they would prefer to maintain their privacy, they are willing to temporarily open up their home in order to get the most exposure and the highest sale price.

The lower commission rationale is not often one we find makes sense for our clients.  It is a net lower amount of fees for them, and a net higher commission for us, but what if the price is lower than what they could get on the open market?  It many cases, that is true and as such we often suggest it is better to net a higher final amount by selling for enough you more than make up the higher commissions resulting from having a buyer’s agent involved.

The only reason from the three above that we regularly find makes sense is the final one of testing the waters.  It means we need to be confident in our pricing strategy so that we’re not leaving money on the table by potentially accepting an offer before we list on the MLS.

In some cases, we have seen buyers who are so eager to avoid the competition and stress of a multiple-offer situation they offer our sellers a price that is too good to refuse.  While anyone can say “But what might happen if we listed and got full market exposure?” our job as your listing agent is to be able to tell you when an offer is legitimately likely to be the best you’ll get for your home.  Whether it comes now or later, if it is an amazing offer, it still is an offer worth considering.

If you’re considering selling and what to discuss whether an exclusive listing makes sense in your situation, don’t hesitate to get in touch with us to discuss next steps.

In fact, there isn’t much time before the goons from organized real estate break down our door, shut down the computers and take us to real estate jail.  It’s a normal jail cell, but what makes it real estate jail, is that it’s described as being located in an in-demand area, with 24 hour security, an on-site exercise area and low, low maintenance fees.

The reason we’re going to be in trouble is because we’re sharing a secret that the public isn’t supposed to know about.  If you’ve ever felt like you’re missing out on something, that there must be some secret way in which some buyers and sellers transact, you’re right.

Here’s the secret – not all properties sell through the MLS system.

Sure, the multiple listing service (MLS) is where the majority of real estate transactions take place, but there’s other ways in which buyers and sellers get deals done.  Without further ado, here’s three other sources for real estate listings.

No Realtors Allowed

The first alternative source for real estate deals is any approach that, by design or by accident, eliminates Realtors from the mix.

While the vast majority of real estate deals are negotiated and written up by Realtors, we don’t have to be involved in a real estate transaction.  Lawyers as well as auctioneers can legally facilitate the purchase and sale of real estate.

Whether it is between family, long-time friends or neighbours, you can be on the look for real life opportunities to find a home that suits your needs and try to negotiate for its purchase.  Such deals do take place but they are relatively rare, as it is often hard to find a motivated seller and buyer who are comfortable with such a large financial transaction without expert advice.

The more common version of an opportunity to buy a place with no Realtor involved is when the property goes up on a network designed to avoid Realtors.

There are lots of private sale listing sites within Ontario that are designed to share information, promote real estate for sale and allow buyers and sellers to meet without using a Realtor and, more importantly, pay Realtor commissions.

Whether these are designed specifically for real estate (fsbo.ca, prelist.org) or are more general sites that also include real estate sales (craigslist, kijiji), there are options that charge a nominal fee to list properties for sale.

The nominal fee is reflective of the fact that such sites are not commonly searched by prospective buyers.  They may be difficult to navigate, have out of date listings, or most critically, just don’t have anything that fits the needs of a given buyer.

There is a subset of this type of option that also includes exposure on MLS.  There isn’t an agent representing the seller in many cases, but they are actually on MLS and will show up when a buyer is looking on Realtor.ca.  Examples of these types of “mere listings” or a-la-carte servicing would include purplebricks.ca, forsalebyowner.ca and countless others.

If you’re willing to put in the time and energy to search a number of different sites, you can find properties that aren’t on MLS.  The caveat with such properties is that when they won’t pay a Realtor, you don’t get the services of your own Realtor as a buyer agent.  This means you better be very certain that the price you’re paying is worth it, that you understand all relevant aspects of the deal and the property and that you know how to avoid problems in a transaction.

Only One Realtor Allowed

The second secret way in which some buyers find properties that aren’t on MLS is through the old-fashioned, hard work of their agent.

Whether it is door knocking neighbourhoods, calling particular buildings or advertising in focused communities, a pro-active approach can result in a buyer finding a property before the seller took it to market.

Such an approach can involve more costs for the buyer as the most common structure involves the seller paying no commission and the buyer instead taking on that cost.  The clear benefit to the buyer is that the price, even including the commission the buyer agent’s brokerage, is one they are willing to pay to get the home in question.

In other cases, your agent can have listings of properties where the seller doesn’t want to go on the public MLS market and is open to their agent bringing a buyer without another agent.  In such cases, the seller could potentially save on commissions and as such is willing to take a lower price on the sale of the property.

Only Good Realtors Allowed

The final secret source for real estate listings involves multiple Realtors, but not all of them.  We’re talking about exclusive networks of busy, active real estate agents from reputable real estate brokerages.

With approximately 56,000 licensed real estate agents in the Toronto region, it’s hard to throw a rock without hitting a Realtor.  On a positive note, if you hit a Realtor with a rock, they will calm down pretty quickly if you mention you might want to buy or sell a property.

While there may be lots of licensed real estate agents, there is a tremendous difference between an established, experienced agent who works at a full-service brokerage and the one who got licensed two months ago, joined the cheapest discount brokerage they could find, and have helped one person lease a condo.

When you work with an experienced agent from a reputable brokerage, you gain exposure to the network of your agent as well as the resources available to their brokerage.

Here’s an example of a CRM program we use on our team (Contactually) and what shows up when we look for contacts tagged as Realtors.

With over 1,200 Realtors that we’ve met, dealt and interacted with over the years, we have tons of people who contact us daily with new, exclusive listings.  We do the same for our listings, because we want to make sure that the active, working agents out there are aware of what we’ve got available.

At the brokerage level, your Realtor also can benefit from their peers within their brokerage as well as the resources that the brokerage has available.  Within Keller Williams Advantage, we have 130 licensed agents and at any given time, about two-thirds of those agents are regularly active and busy working with sellers and buyers.  We share information about what our clients are looking for or what we have coming on private Facebook groups and internal meetings.

In the past couple of years, we have also seen the rise of extended, multi-brokerage exclusive networks through private companies like BrokerBay.  BrokerBay is a brokerage software company that streamlines appointment bookings, showing feedback, offer registration and also offers a platform to share exclusive listings.  We use it at Keller Williams Advantage and it ain’t cheap – and that’s a good thing.  It’s used by about 40% of brokerages in Toronto and they are the full-service, quality focused brokerages that are doing enough business to make it worth their while.

Here’s a screenshot of their Exclusive Network platform where we can look for properties that aren’t on MLS but are currently available to peers within the BrokerBay network.

While not all exclusive listings are on this network (and if they were..it wouldn’t be exclusive would it?) we’ve reached a tipping point of sorts, where there are enough properties being shared that deals are getting done through this method.

There you have it – three ways that deals get done before they hit the MLS system and the general public.  If you enjoyed learning about these alternative approaches to finding properties for sale and like the idea of working with an agent who can make the second two ways happen, get in touch with us.  In the meantime, we’ll finagle a way to get ourselves out of real estate jail so we’re ready to help you move forward.