'Sleeving' market for homes sparks ethical controversy
Jeremy and Krista Whiteman dreaded selling their house in Chaska, Minn.
They already had their hands full in the evening with feeding and cleaning up after their two boys, who are 5 and 3 years old.
The idea of repeatedly sprucing up their house for showings, on top of all their daily chores, made them crazy.
"You get like an hour's notice for a showing, and so many at first. We thought, 'No way,' " Jeremy said.
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The historically low supply of homes in the Twin Cities means a dearth of listings for sale, and bidding wars that take place over the few available homes. The steep competition is prompting some real estate agents to market homes privately, before they're listed publicly.
Typically, a real estate agent announces a home for sale by listing it on an industry database called the Multiple Listing Service. But the Whitemans' agent offered instead to market their home privately, in a method called "sleeving," or "pocket" listing. That involved checking with her colleagues at Edina Realty to see if they had buyers who might be interested. All this would take place before listing the home on the MLS.
The agent said that route would be easier for the Whitemans, and they might be able to sell their house without it having to undergo a major paint job and cleanup.
"Price is one piece of it. Conditions and terms are the other pieces... for various sellers, those pieces may outweigh the financial piece."
Edina Realty handles about 20 percent of the home sales in the Twin Cities, so there would still be a decent private market for the property.
The Whitemans took one look at their two boys and dog and said yes. They sold the house for less than their ideal asking price -- $211,000 instead of $219,000. And it only took one showing.
"We sold our house before we even went on the market!" Krista said.
The practice of marketing properties prior to listing them on the MLS is legal, the state's Department of Commerce says, as long as agents explain the trade-offs sellers are making..
But some real estate agents question whether that's the case.
"The seller is consenting, but it's not necessarily informed consent," said Jim Tice, a sales manager with Century 21 Luger Realty in Edina. He's critical of agents who practice sleeving.
When agents sleeve listings, Tice has fewer homes to show his own clients. And that could hurt his bottom line.
But that's not his main concern. Tice thinks sleeving is unethical. The supply of homes for sale is so tight right now that many properties draw bidding wars, which typically raise the final sale price.
No agent should deprive a client of that opportunity, Tice said.
"If your goal is to get the top dollar, if your goal is to serve the seller's interest -- put their interest first -- then you'd want the market at large to have a chance at it," he said.
However, price isn't always paramount, said Cassie Frick, the Edina Realty agent who sold the Whitemans' home.
"Price is one piece of it. The conditions and terms are the other pieces," Frick said. "And for various sellers, those pieces may outweigh the financial piece."
Frick said many of her customers are like the Whitemans -- they have a family, and they're willing to trade money for convenience.
Jeremy Whiteman agreed to accept less than asked for his house. He works in finance and ran the numbers, and decided it was worthwhile to sell their Chaska house quickly, without bidding wars, so they could snap up a new home in Chanhassen. They got a great price on the new house. It's in the school district they wanted, and the kids love the new, big backyard.
"If I lost $5,000-$10,000 on the other house, I'm buying this one for a lot less than it would've been," he said. "That helps me sleep at night."
Industry insiders think that sleeving or pocket listing will eventually fade, as it has in the past. When the tight market loosens, sellers and agents will likely need to once again expose a house to as many buyers as possible.
