Trying to Keep the Playing Field Level
“As you are no doubt aware, allowing a showing on your listing while it is in TNAS (Temporarily Not Available for Showing) status is a NorthstarMLS rule violation. We have changed the fine for this violation to the List Agent from $100 to $1,000. This reflects its more serious nature and brings it in line with the $1,000 fine amount that is already in place for showing a listing while it is in Coming Soon status.”
–Northstar MLS (May 3, 2019).
[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway (“Berkshire”), or any other entity referenced. Edina Realty is a subsidiary of Berkshire.]
While I applaud the MLS’ decision to increase the fine for showing TNAS listings, I doubt that — even at $1,000 — it’s a sufficient deterrent.**
That’s because the payout commission (offered to the Buyer’s agent) on even an average-priced Twin Cities home is significantly more.
Buyer’s Agent Commission Math
Assuming a $250,000 home offering a 2.7% payout, the Buyer’s agent stands to pocket $6,750 on a consummated sale (at least before their broker takes a cut — in some cases, as much as 50%).
Which leaves two other calculations for listing agents tempted to look the other way on allowing TNAS properties to be shown — or to do so themselves: 1) what are the odds that the showing will result in a sale?; and 2) what are the odds of being caught?
My answers: 1) usually only 10% — but potentially much higher depending on the home and specific Buyer; and 2) virtually nil.
All of which argues that, when it comes to keeping TNAS and “Coming Soon” properties from being shown, if MLS truly wants to assure a level playing field for all Buyers, a better strategy than deterrence is simply banning dual agency.
**Wanna guess who’s improperly showing the TNAS home?
My gut tells me that the majority of the time, the Buyer’s agent doing the showing is also the listing agent — a practice known as “dual agency.”
See also, “Perils of Dual Agency, Exhibit A“; ““Dual Agent” vs. “Double Agent”“; and “Bell Curves, Home Showings, and the Odds of Getting an Offer: Why Home Sellers Shouldn’t Get Too Excited About a 1st Showing.”