It's no secret that homes are selling quickly. There is stiff competition because the low inventory of available homes for sale is unprecedented. According to Gay Cororaton, the National Association of Realtor's Senior Economist and Director of Housing and Commercial Research, there is less than a 2-month supply of homes on the market. Cororaton says, "All in all we're short now about 3 million homes." Home values are skyrocketing because many buyers are offering more than the list prices for homes. The interest rates are still low as well. Local multiple listing services (MLS) have implemented private listing networks that sellers are using to help sell their homes.
The Private Listing Network and How it Operates
The Private Listing Network is a place in the MLS where real estate brokers can input their clients' listings before they are available as "Active" in the MLS and before they are publicly available on the internet. Only other real estate brokers can see these private listings. Many brokers search the Private Listing Network because they have buyers who are searching for homes. The private network shows brokers what homes are coming on the market soon. Many of the private listings have prices, photos and descriptions.
The Advantages of the Private Listing Network
One big advantage of the Private Listing Network is that sellers may be able to sell their homes before they are listed publicly as "Active" in the MLS. This means they may not have to deal with a lot of buyers coming through their homes. Sellers are allowing a few brokers to bring qualified buyers to see their homes while they are listed in the Private Listing Network. This is great for sellers who want to keep their families safe from the Covid-19 pandemic.
Brokers who are bringing their buyers to see homes in the private network need to be sure their buyers have a preapproval letter and are qualified. They must educate their buyers that they will, most likely, have to offer full price or more on the homes if they want to put in offers for purchase. Home values are still rising month-over-month. They must also be prepared to meet other terms that the sellers have. If the sellers aren't allowing showings while their homes are in the Private Listing Network, it builds anticipation for brokers who have buyers. Brokers may be able to pre-schedule showings for the day the listings are active.
The Disadvantages of the Private Listing Network
There are disadvantages for sellers who are putting their homes on the Private Listing Network before listing them publicly. There are still many brokers who don't know about or don't use the Private Listing Network. According to Realtor.com statistics, more than 95% of buyers search the internet before they contact a real estate broker. These buyers won't see listings on the private network. Sellers may get excited that their brokers are getting so much interest when their homes are on the private network. However, when the buyers come see their homes in person, there is a chance they may not be interested. They may have to list their homes publicly to get more exposure.
Gay Cororaton states that one of the reasons for the historically low inventory is that homeowners are staying in their current homes longer. This, in turn, means there is less turnover of existing homes. The reasons aren't crystal clear. Homeowners may be reluctant to allow buyers to walk through their homes because of the pandemic. Cororaton said this is especially true for older homeowners who are more at risk or who have underlying health issues. The Private Listing Network may help solve this problem and more homes may go on the market.