I write this from Orlando. Industry leaders are here at the Florida Realtors midwinter business meeting.
Recently I was speaking with a good friend and colleague about the role of the Realtor in real estate transactions, especially in light of national TV advertisement by certain websites that imply the prospect of a lesser or nonexistent role.
Being an odd fellow this got me to thinking. What would be the test of this? Transfer of real estate title is a public record and must be filed with the county. So I could:
- make a database of all property transfers in a neighborhood;
- make a database of all Multiple Listing Service (MLS) sales;
- compare the percent of MLS sales to total transfers over time.
Now there are situations where a deed transfer might not be a “sale” per se. For example, if someone transfers a property into a trust, that would be registered but is not a sale. Sometimes in a divorce a property may change title. But those occurrences should be relatively constant over longer time frames.
I took a quick look at the last four calendar years’ (2012-15) transactions in the three WilMa neighborhoods (West/Center/East), as well as in the adjoining Fort Lauderdale neighborhoods of Poinsettia Heights, Middle River Terrace and South Middle River.
From 2012 to 2015, in all six neighborhoods, there was a significant decrease in the proportion of property transfers that went through MLS!
What could explain this?
1. Problems with the county data.
2. More “By Owner” sales (FSBO). The reports from the National Association of Realtors always say nearly everybody who tries FSBO fails and eventually uses a Realtor. But as I constantly complain at conferences like this (and in my writing), all real estate is hyper local! National statistics mean little to nothing at the ground level.
3. More “exclusive” or “informal Realtor” sales. There is a trend in the industry toward “branded super agent” and “branded team” approaches to business independent of any brokerage umbrella. The branded agents/teams know each other and prefer doing business with each other, and control of the listing is critical. One branded agent talks to another and says, oh I’ll have a listing in a couple weeks at such-and-such, the sale happens and MLS never knows. Or you get a listing and have a buyer in the pocket yourself or in your brokerage. Same thing.
4. Transfers between “sophisticated investors” who don’t need Realtors.
This is a really notable development, folks! It is going to vary by county, by city, by neighborhood, even by property value. The macro statistics will miss it, until it is too late.by