Keeping listings close to the vest

In tight market, some say properties are quietly shopped in-house before hitting RLS

Real estate agent Christopher Stokes Moseley recently spent months helping a homeowner prepare to sell his apartment, even talking him through a kitchen renovation.

“I held his hand through the entire process,” said Moseley, a senior vice president at Charles Rutenberg Realty. So he was shocked when the seller ultimately signed an exclusive listing agreement with a larger firm, saying he felt the bigger company would provide “a wider audience” than four-year-old Rutenberg.

Moseley was even more surprised to see that it took more than a week for the listing to appear on the market, an apparent violation of Real Estate Board of New York rules that require brokers to share listing information within 24 hours of signing an exclusive sales agreement.

“You would expect it to show up in the system within two or three days, [not a case where] 10 days later it’s out on the market,” said Moseley, noting that he’s seen several similar examples recently. “And it just tells me those bigger firms are sitting on those listings, and trying to promote them within their firm.

“At the end of the day, it doesn’t do justice to the seller.”

As relatively tough times continue for the New York market, brokers say they have noticed a drop in information-sharing. With prices down and the inventory of desirable listings shrinking, some brokers are more hesitant to co-broke, hoping to keep the entire commission, typically 6 percent, for themselves. To facilitate this, brokers say, some delay entering listing information into REBNY’s Listing Service, known as RLS, while trying to find a buyer on their own or within their firm.

“In difficult markets like we’ve had in the last couple of years, you’ll see that happening,” Moseley said. “People are trying to protect their commissions, and they want to do those direct deals where they don’t have to co-broke.”

On the flip side, many brokers don’t update their listings once they are sold or in contract, hoping to attract moneyed buyers as clients.

Both of these problems can persist, industry insiders say, because REBNY rules are rarely enforced.

“It’s an honor system,” said Donna Olshan, the president and owner of Manhattan-based Olshan Realty. “There is nobody watching the store.”

Years ago, New York brokers were not required to share their listings with other agents.

“There was never even a mechanism for requiring people to co-broke,” explained Eric Gordon, founder of online listings platform RealPlus. “It was, whoever you liked, you sent it to.”

Industry experts agree that more exposure is in the best interest of sellers, since it corresponds to higher prices and faster sales. But since listing brokers are required to split their commission with the broker who brings a buyer, they have an incentive to keep their listings close to the vest. In the same way, firms make double the profits when their exclusive listings are sold to buyers represented by in-house brokers. As a result, some firms in the past provided financial incentives — such as larger commission splits — when agents did deals with brokers from the same company.

But in recent years, attitudes have changed drastically. In the early 2000s, REBNY introduced a co-broking agreement that required brokers to share information about their exclusive listings with every dues-paying REBNY member within 72 hours. Today, brokers are required to disseminate that information via RLS within 24 hours (not including holidays and weekends) of receiving the owner’s signature on the agreement, unless the owner specifies otherwise in writing. Similarly, the practice of firms rewarding agents for doing in-house deals has now largely disappeared — officially, anyway — because it is viewed as not serving the fiduciary interest of the client.

“REBNY has done a really good job in terms of convincing people that we need to work much better together,” Gordon said. “There’s still work to do, but they’ve come a really long way.”

Since the industry hit hard times at the end of 2008, many brokers have come to believe that co-broking is more important than ever, and Steve Spinola, the president of REBNY, said the vast majority of listings are shared in a timely fashion. “We believe that almost all of them are available to every other firm within 24 hours,” he said.

Still, some brokers have taken the opposite approach, and are more hesitant to share data than in the past.

With prices down and properties on the market longer, many brokers are loath to share their commissions, said Scott Morrow, a Park Slope-based senior vice president at Rutenberg.

He noted that as the downturn enters its third year, inventory is shrinking: With many would-be sellers waiting for conditions to improve, few desirable new listings come on the market.

Meanwhile, a growing number of “For Sale by Owner” listings (known as FSBOs) also means fewer listings for brokers, Morrow said.

“Everyone has to fight harder to get inventory,” he explained. “There are fewer and fewer [listings], and you need more money out of each one.”

The reluctance to share listing information is particularly noticeable in Brooklyn, where many brokers are not REBNY members and thus not required to co-broke, he said. In Manhattan, reluctance to co-broke is harder to detect.

“It happens,” said Moseley, who believes that some companies e-mail listings to other brokers within the firm before entering them into the REBNY system, or simply spread the word to friends. “It’s subtle, but it happens.”

Another common complaint is that brokers don’t update their listings once an apartment is sold or in contract.

“There are tons of listings that are out of date,” said Noah Rosenblatt, a broker and founder of real estate website, who is working on a new data-tracking platform. “There’s an incentive not to update the listing so more buyers can call and say, ‘I’d like to look at this property.’” That way, he said, brokers can “get buyers they never would have gotten.”

Failure to share listing information isn’t always nefarious. It’s difficult to prepare marketing materials and photos in only 24 hours, brokers say, and listings without photos are often overlooked. And sometimes, there’s a technical glitch or other mistake.

Gordon, who often fields complaints about listings, said brokers often wrongly assume lack of information sharing is purposeful and malicious.

“A lot of the agents believe that it’s being done on purpose by the larger firms, that they’ll have an office meeting and say, ‘Okay, we’re not going to send out our listings because we don’t want to help the rest of the industry,’” Gordon said.

The city’s two largest firms, Prudential Douglas Elliman and the Corcoran Group, did not respond to requests for comment about their policies, but experts said it’s unlikely that a firm would encourage their agents to do in-house deals, at least openly.

“Every now and again, a listing doesn’t make its way out, rumors spread, and the next thing you know, agents start saying that this particular firm never sends their listings on time,” Gordon said. “I don’t believe it’s anything systematic.”

Diane Ramirez, the president of one of the city’s largest firms, Halstead Property, said: “Our agents hear from us constantly that ‘you must follow the rules.’”  She added: “If I knew there was someone who was just not following the rules, they would not be carrying a Halstead card.”

Still, it’s often difficult to detect whether agents are following the rules.

“You have some firms who do a very good job,” Olshan said. “Some people are doing the 24 hours, some people bend it a little because nobody’s watching. There’s no police force.”

In many conventional Multiple Listing Services around the country, fines are automatically levied when rules are broken. While REBNY has the authority to issue fines, the fines are not automatic — when a complaint is made, agents are expected to try to work it out among themselves. If that fails, a REBNY committee meets to decide how to respond.

That can be a lengthy process. “Who’s going to bother with it?” Olshan said. “It’s very time-consuming.”

Some in the industry are calling for stricter penalties.

“We need more enforcement,” Rosenblatt said. “We need some kind of oversight to have the capacity to fine those parties who sacrifice data integrity.”

Gordon agreed that more fines are needed to improve information sharing. “The rules exist, but unless there are penalties that are consistently enforced, people will get away with whatever it is they can get away with,” he said.

When it comes to updating listings, Spinola said infractions are difficult to detect, but that proposed changes to the data platform R.O.L.E.X., which is used to transmit REBNY listings between firms (see “Last to list”), may result in “tools to better monitor that.”

Making sure brokers upload their listing information within 24 hours could be done by requiring brokers to provide copies of their exclusive listing agreements to REBNY, but that could be “a very expensive proposition,” Spinola noted.

“I’m not sure if the brokers would want to add additional costs to do that,” he said.