>> A great agent can be the difference between getting a property or not.
I've heard such success stories, and I agree with you. An agent knowledgeable about one city would be ill suited to sell homes in another. It's very difficult for an agent to transition between cities, even if that agent is excellent at selling properties in his or her current city. Success depends too much on how much an agent knows about the local region and community. The point I was trying to make was that the amount of knowledge is relatively constant (e.g. what sellers look for in a buyer), it's just a different body of knowledge that depends on the region.
>> You do realize that the number of pocket listings has grown substantially in the past several years, right?
No, I did not realize, sorry for my narrow perspective!
>> They're far more likely to be tapped into the networks that will give their clients access to properties that haven't hit the MLS.
This is again to my point - the success of an agent depends more on what they know about their region (e.g. available properties, all-cash offers vs. larger offers, etc.), than the actual amount of work.
IMHO it simply isn't enough of a difference to justify a 10-fold increase in price. Palo Alto is an extreme example. There are likely niche communities where buyers would rather pay a fixed-cost and accept the risk inherent with taking a less-reputable agent.
Knowledge is money. This is just as true in real estate as it is in, say, software development.
Big difference between that and submitting an online offer form.
But as an aside, I think Open Listings will be huge, or at least similar flat fee models in the future (Redfin was another big step in the right direction chunking out 1.5% of the cost for consumers and removing commission for their agents)
And yeah, many properties never hit the MLS, so a solution would be more of a networking solution, rather than just something to replace the MLS, because that would not change much. Many times it's not even a issue with information being available, it's kept off the MLS because they want to get their contacts in on it first. It's a I'll help you, you help me type thing.
It's not just Open Listings clients that won't see the listing but all potentially interested buyers who don't have an agent who is friends with the listing agent (most buyers). It's definitely in the agent's short-term best interest to cultivate these relationships but ultimately the consumer suffers.
Luckily, this type of listing is relatively uncommon and most good agents see the value of getting as many eyeballs on their listing as possible.
Pocket listings account for a not insignificant percentage of sales in some markets. According to one source, in Q1 2013, they made up as much as 25% of sales in certain Northern California markets[1].
> The problem is that by not putting a home on the open market, the seller never finds out how much it's really worth.
You are making a couple of major assumptions:
1. Optimizing for price is best accomplished by maximizing the number of potential buyers.
2. Optimizing for price is the primary/only motivation of a seller, and outweighs all other considerations, such as speed, privacy and risk.
Neither is always true, especially at the high end of the market. A good agent is going to understand his or her seller's needs and employ a strategy that makes the most sense, and it's the seller's responsibility to decide whether the agent's recommended approach is acceptable. Absolute statements (pocket listings are good/bad) are easy to make but ignore the fact that different scenarios reasonably lend themselves to different sales approaches.
[1] http://speakingofrealestate.blogs.realtor.org/2013/05/16/mls...
Oh, and I have a feeling that many of those hard-working buyer's agents are probably less hard-working if the buyer is black, since this has been a long-running issue.
There are a number of "Solicitors Property Centers" where groups of solicitors got together to create websites listing all of the properties in their areas:
http://www.espc.com - Edinburgh
http://www.aspc.co.uk - Aberdeen
http://www.hspc.co.uk - Highlands
Work != value.
Here, you seem to have overlooked the fact that Open Listings is trying to "disrupt" the buyer's agent (although technically that's what it is). If you think the only thing a buyer's agent has to do to close deals in hot markets like Palo Alto is to submit an offer and run through the motions, you're mistaken. A great agent can be the difference between getting a property or not.
> For those who are interested, innovation in the real estate market has been difficult due to the monopoly on housing listings. The "Multiple Listing Service" (http://www.mls.com/) is the only master directory of housing lists and is only made available to "Realtors". In case you didn't know, Realtors are not exceptional agents, they simply pay to be members and gain access to the MLS. My dad was a member for the longest time just to have access to the MLS. After all, when a customer asks you to help buy a home, where are you going to get your list of available properties from?
You do realize that the number of pocket listings has grown substantially in the past several years, right? In some markets, pocket listings account for double digit percentages of sales.
This, incidentally, is another reason to work with an agent who is a top producer, particularly in a hot market. They're far more likely to be tapped into the networks that will give their clients access to properties that haven't hit the MLS.