When Brad Wiseman wanted to buy a new home for his family, the veteran real estate agent made an offer early for a place in Calabasas. But his offer, at $50,000 over asking price, didn’t fly. “The (selling) broker literally laughed in my face,” he recalled. “He told me I wasn’t even in the ball game.” So Wiseman, director of Pinnacle Estate Properties Inc.’s Platinum Estates division in Calabasas, applied a little inside knowledge. He did what agents across the San Fernando Valley have often been forced to do for clients in an odd, blistering residential real estate market that is short on inventory: he made cold calls to homeowners asking if he could buy their unlisted home. With fewer homes listed for sale than at any time in the Valley’s history, residential agents have been resorting to unusual tactics to find and keep any inventory – and it’s more than just cold calls. From the proliferation of so-called “pocket listings” – homes sold on the side without a posting on a multiple listing service – to an increased emphasis on marketing aimed at just finding listings, area professional are trying anything. “We are really urging all the agents in our offices to go out and put their energy into finding homeowners who will list their properties,” said Kathy King, vice president at Prudential California Realty in Encino. “They have to do that. We’re selling more homes than we’re listing and we can’t keep doing that.” In March, just 1,015 homes were listed for sale in the Valley according to Van Nuys trade group Southland Regional Association of Realtors. That amounts to little more than a month’s inventory. With record-low interest rates, buyers are ready to plunk down money on those homes, but brokers are finding it difficult to make a deal, with multiple bids coming in on every home. “We’re seeing regularly multiple offers and lots of all-cash bids,” King said. “We’re having to work hard to get people out of homes and into homes.” Strategy shift Wiseman is finally set to close escrow this month on a home in Woodland Hills, but it took a lot more than just touring Saturday open houses and making an offer. After striking out on several bids, he ended up writing letters and calling owners of homes he might like to buy – even if they weren’t on the market. But his story isn’t even unusual. Steve Katz, branch manager of the Studio City office of Coldwell Banker Residential Brokerage, said agents are pulling out all the stops to find properties. “Agents are reaching out to their networks, letting people know that there’s a shortage of inventory and that now is the time to sell,” he said. “They’re calling and sending mailers and letters to homeowners in areas they cover. It’s common now.” Nearly all area agents said the market is also moving some sellers to agree to so-called “pocket listings,” in which agents don’t list the property, but quietly reach out to potential off-market buyers. The trend is controversial, with many agents saying it’s a disservice to sellers – and driven by agents’ desire to monopolize a listing commission. “It’s happening for sure, but it’s a really thorny issue,” said Katz. “Agents are reaching out to past clients, and they’re agreeing to sell the house if an agent can get a certain price, but don’t really want to go on the market. But sellers should be counseled that they may not get the best price.” The practice has drawn attention from multiple listing services and the National Association of Realtors, the Chicago trade group that represents a majority of practicing agents in the country. Last month, the group issued a memo to members, reminding them that pocket listings may violate its code of ethics. And, agents say, it’s a shady tactic when it comes to commissions. While commission on a sale can often run up to 5 percent, that’s often split between the buyer and seller agents. With a pocket listing, one agent can collect the entire fee – and pocket more money than a home sold through MLS at a higher price. But it’s a seller’s market, meaning that if a homeowner wants a quiet, off-market transaction, they are going to find someone to do it for them. It also means that they can be picky about the buyers. With homes generating multiple offers in a matter of days, agents are looking increasingly at all-cash buyers who can ensure that a deal will go through. “I can’t believe how many people have been sitting on all this cash,” said Bill Toth, principal at Toth & Associates Inc. in Burbank. “We’re seeing lots and lots of all-cash offers on everything.” Those all-cash offers can create another problem for buyers. With all-cash buys, sellers are often forgoing the appraisals required by lending banks. And with properties selling over market rate, buyers can be forced to go appraisal shopping. He pointed to the recent Burbank sale of a five-bedroom, five-bathroom Craftsman-style house in the Media District as a prime example. “I thought it was a great house, so I listed it at $939,000,” he said. “And the buyer came in with a bid of $999,000. The appraisal came back at $900,000. That’s when they (went) to another appraiser until they got what they wanted.” Long game A shortage of houses and the hard work needed to find listings can be tough on agents, but not everyone believes it’s a bad trend. “It’s changed the dynamic of how they list,” said Raphael Bostic, a professor at USC’s Price School of Public Policy who specializes in housing and mortgage markets. “Brokers are leveraging their networks and probably not doing a whole lot else. It’s a very good time for them because they can expend fewer resources on selling a home.” It’s also highly unlikely that the market will stay at the frenzied level of the last few months. Already, Bostic said, inventory has started to rise slightly as homeowners who spent much of the last few years underwater on their mortgages see that they can sell and maybe walk away with some capital. In some of the hottest pockets in the eastern and central valley, the inventory dip is already starting to bottom out. And there are more homes available in the Conejo and Santa Clarita valley markets, likely causing buyers to consider those areas. Wiseman said that he expects inventory to approach normal levels by the end of summer. “This won’t keep up forever,” he said. “We’re still going to be looking for homes, but this isn’t a healthy situation and it’s going to go from a sizzle to a slow burn.”
Agents Go Top Secret with Listings
