‘Zero Days on Market’: Study highlights controversial metric

This is the third in Inman’s five-part series on pocket listings in today’s market. Check back in the coming days for additional features and click here for the first installment and here for the second. Thursday: How real estate pros are finding off-markets listings via encrypted apps.

The number of listings that sell with zero days on market has soared since a national pocket listing policy went into effect, according to a controversial new study from Broker Resource Network obtained exclusively by Inman.

The study, “The Quiet Threat of Zero Days on Market,” aimed to measure the impact of the National Association of Realtors’ Clear Cooperation Policy, which requires listing brokers to submit a listing to their MLS within one business day of marketing a property to the public. The policy was designed to curb pocket listings, in part due to fair housing concerns, and had an implementation deadline of May 1, 2020.

Broker Resource Network, a spinoff of brokerage network The Realty Alliance, has 84 brokerages with between 200,000 and 400,000 agents combined as members. For the study, BRN members pulled data from a total of 24 multiple listing services comparing the number of properties sold in the MLS within 24 hours of being listed during two periods: 12 months before the May 1, 2020 Clear Cooperation Policy deadline and 12 months after.

According to the report, BRN members “immediately recognized a shift” after the deadline that was unexpected.

“In every market reviewed across the United States, brokerages recognized double and triple digit increases in Zero Days On Market listings across firms of all sizes and business models,” the report said. In one market, the increase was a whopping 844 percent.

Screenshot of sample data by office with broker name omitted

As a result, BRN’s report calls for a re-evaluation of the Clear Cooperation Policy.

“If this trend continues, we fear that it may erode the importance of the MLS, have devastating impact on fair housing, and create other business issues that would impair cooperation across our great industry,” said Kent Hanley, president of the Broker Resource Network, in a statement.

“It’s time for us all to engage in this conversation across networks, interest groups, and news sources for brokers in the industry today. Whether you are a franchisee, an independent, a traditional broker, an alternative model, a single or multi-office, local, regional, or even a national firm, this is a topic you should care about.”

The real estate industry should collaborate to understand the cause of the increase, according to BRN. “When policy has the opposite outcome of what is expected, the policy and the problem need to be readdressed,” the report said.

“Broker Resource Network would love to work with MLSs” to create a policy, BRN spokesperson Victor Lund of WAV Group told Inman via email, noting that a broker has come up with an alternative policy, but has not yet submitted an official policy statement to NAR for consideration.

BRN’s report recognizes that there are legitimate reasons why some listings sell with zero days on market (DOM), including properties recorded in the MLS by homebuilders, listings where sellers represent themselves but homebuyers are represented by an agent, and listings that are entered into the MLS as “coming soon” listings — and therefore exposed to buyer agents — but that don’t accumulate days on market until they switch to “active” and may then receive offers immediately.

Still, “the enormous increase in the number of homes selling for zero days on market indicates that there is a growth in the number of properties that are not being widely disseminated through the MLS,” the report said. “This not only indicates the potential for fair housing violations, but it also is indicative of less cooperation in sharing listings through the MLS.”

Office exclusives, where a listing is only marketed within a brokerage and not in the MLS, are also often recorded as having sold with zero days on market. Office exclusives are a controversial exception to the Clear Cooperation Policy. In May, Redfin released a study finding that, since the CCP went into effect, the number of homes sold without being marketed to the public increased 67 percent, from 2.4 percent to 4.0 percent, and may still get worse; at the time, the rate had risen every month in 2021. Redfin CEO Glenn Kelman called for NAR to end the office exclusives exception.

“NAR has already banned agents at different brokerages from sharing pocket listings with one another via Facebook groups or email lists,” Kelman wrote. “But this well-intentioned policy had the unintended consequence of creating a monopoly on a monopolistic practice, favoring the big brokerages who can still pocket listings within their own brokerage, in what are known as ‘office exclusives.’

“The big brokerages could end pocket listings today, just by looking for the offices selling a large number of listings that are never marketed to the public. At its November conference, the NAR could support these brokers by closing the office-exclusive loophole industry-wide.”

BRN’s study found that in MLSs without a “coming soon” status, many brokerages listed homes as office exclusives in order to conduct repairs, inspections or staging before later converting them to a standard “active” listing. The report suggested the hope for an “industry conversation around the need for a national Coming Soon policy.”

What the study didn’t look at

The report compared the number of zero DOM listings before and after the CCP and then derived a percentage increase from that at the brokerage level. It did not calculate that percentage at the MLS level, so the report does not include figures for how much zero DOM listings increased for each of the 24 MLSs in the study.

The report also does not look at the percentage of zero DOM listings compared to overall listings in an MLS, therefore it is impossible to know whether and how much the rate of zero DOM listings rose. For instance, if 5 listings out of 100 listings were zero DOM before the policy was enacted and after CCP there were 10 zero DOM listings out of 200 listings, then the actual rate of zero DOM listings would have remained the same.

Victor Lund

Real estate consulting firm WAV Group created the report for BRN. Asked about the rate of zero DOM listings, co-founder Victor Lund said BRN was more focused on the policy’s failure to curb pocket listing behavior.

“We are talking about hundreds or thousands of homes that were listed and sold in the same day — meaning that MLS participants and subscribers did not even have the benefit of a single day to share with their buyers,” Lund said.

The study also did not look at how many of the zero DOM listings were office exclusives or how many were double-ended. The study also did not compute an overall increase in zero DOM listings across the 24 MLSs.

“The goal of the study was to invite the industry to a conversation with brokers on how we can revise policy to curb this radical increase,” Lund said. “All of the MLSs we spoke to are interested in that.”

MLSs push back

The report included data from only 12 of the 24 MLSs and comments from only nine of them, most of which disputed the study’s findings in some way.

Lund said via email that WAV Group reached out to all 24 MLSs, sending them each a statistical report a broker in their market had pulled from a back office feed and requesting that the MLS verify the statistics.

“Many MLSs were not able to replicate the same data,” the report said. “We believe that this is because the data in the MLS is not exactly the same as the data that the MLS makes available through their distribution servers to broker back-office feeds.

“In a few cases, the MLS could not verify the data provided, and some MLSs requested that the BRN withhold publishing data from their market, indicating that it would be a violation of their rules. They did not dispute the findings, but rather the use of data for these statistical purposes. The BRN firms disagree with this determination.”

If an MLS did not specifically approve of their data being included in the report, WAV Group did not include it, Lund said.

Of the nine MLS executives that commented for the report, many suggested the study’s results were due to hot market conditions rather than to any effect from the Clear Cooperation Policy.

John Mosey

“It doesn’t look like much of an issue,” John Mosey, CEO of Minnesota’s NorthstarMLS, said.

“Out of 130 companies, a grand total of 529 more properties in May 2021 than in May 2020 were sold ‘in-house.’ Or, +13.5%. In this market, I don’t find it surprising that sellers might look at avoiding showings while still attracting a price that would ‘make them move.’”

The Houston Association of Realtors analyzed…

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