Private Exclusive vs. Coming Soon: What Sellers Should Know

If you're getting ready to sell, you may hear an agent pitch something called a private exclusive listing. It can sound like a VIP perk. Your home gets shown quietly to a select group of buyers before it ever hits the open market. I'll be honest: this topic fires me up, because in my opinion, for most sellers it does the opposite of what it promises.

What a private exclusive listing actually is

A private exclusive is essentially a pocket listing. It's a listing that only the agent knows about, or the agent and the people in their office, or the people inside one brokerage's network. The home isn't on Zillow, it isn't on the other websites buyers use, and most buyers and agents in the area have no idea it's for sale.

A coming soon listing is different. It lets you start marketing a home before it's ready for showings, but the whole world can see it. It's on the public websites, the agent's site, social media and video. Every potential buyer and every agent can find out the home is about to hit the market.

Fewer buyers means less competition

I'll argue this to my grave: any time you limit the number of people who can buy something, the competition and the price go down.

Here's my favorite example. I used to love going to building materials auctions. If I showed up and there were 10 people there, I'd think, "I'm getting some deals today." If I showed up and there were 100 people, a lot of them I didn't know, I knew the bidding was going to be fierce and I was going to pay more. Houses work the same way. Three buyers create a lot less competition than 300.

"Testing an aspirational price" can backfire

One argument for private listings is that they let you test the market at an "aspirational price" before going public. The problem is that overpricing costs sellers money. When your home is overpriced, buyers buy the competing homes that are priced right, and you end up lowering your price while your listing goes stale.

The buyers who see your home first are usually the best ones. They're excited and ready. If they walk in, see a price that's out of line, and then watch it come down later, you've already shaped their opinion. You only get one chance at a first impression, and a private test run can use it up on a small group.

The days on market argument

Another pitch is that a private listing keeps your home from piling up days on market, which can make buyers wonder what's wrong with it. That sounds good to a seller. But think about how you avoid racking up days on market: by limiting how many people know the house is for sale. You can't make a house sell faster by marketing it to fewer people.

Buyers and agents want days on market information. It's part of how they decide what to offer. They're going to keep using the websites that show it, and if your home isn't on those websites, those buyers aren't seeing it.

About that 4.6% claim

Part of the pitch for this kind of "phased marketing" is a claim that it gets sellers a 4.6% higher price, with less time on the market and fewer price cuts. I'd ask: compared to what? You can't put the same house on the market twice to find out whether another buyer would have paid more.

Say you test the market at $750,000 and accept $730,000. That feels close to list. But if you're the seller, you'll always wonder whether full exposure would have brought a $750,000 offer, or multiple offers at $760,000. With a private listing, you'll never know.

Who a private listing really benefits

There's one case where I agree with the pitch: privacy. If you're a pro athlete or a celebrity who doesn't want curious people walking through your house, a private listing makes sense. If LeBron James wanted to sell his house quietly, I'd totally get it. He's not chasing every last dollar.

For almost everyone else, though, I think the main benefit goes to the agent and the brokerage. If the listing agent or someone in the same company finds the buyer, the company keeps more of the commission. Our code of ethics says we're supposed to do what's best for our clients, not for ourselves.

The industry is noticing. On October 26, several of the largest real estate companies, including Keller Williams, HomeServices of America, the parent company of eXp Realty and Real REMAX Group, announced a shared listing initiative aimed at keeping more homes visible to all buyers.

What we recommend instead

I don't disagree with everything in the private listing pitch. Building excitement before a home goes live is a great idea. My point is simple: do it for everybody. Use a short teaser and coming soon period that every buyer can see, then launch the home with maximum attention on it. We walk through exactly how we do that in a separate post on how we market a listing.

If you're thinking about selling and want to talk about how to get your home in front of the most buyers, schedule a time with me or someone on our team at 21mike.com.

Mike Ferrante
The Mike Team at LPT Realty
www.21mike.com
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