DENVER — Colorado regulators are warning real estate agents not to keep listings away from the market in an effort to boost their pay.
The state’s hot real estate market is boosting the practice of brokers putting up signs saying listings are “coming soon,” The Denver Post reported Friday (http://bit.ly/1uoECRs ).
The Colorado Real Estate Commission issued the warning because the practice can be bad for consumers. Because the full market can’t bid, sellers might not get as much as they could. Agents are able to take a commission from both the buyer and the seller.
Selling property off the market is OK if sellers realize the risk they’re taking, the commission wrote in its opinion issued last week. If not, that “endangers the interest of the public.”
Marcia Waters, director of the Department of Regulatory Agencies’ real estate division, said the practice has become “fairly widespread” for the last six to eight months.
No agents have yet been punished for using such tactics, but they could face reprimands or fines.
Consumer harm can be substantial, said Marcia Cotlar, an agent at 8z Real Estate in Boulder. She said sellers could stand to lose as much as 25 percent of their homes’ value by going under contract before hitting the market.
“I think sellers these days are, ‘Oh my god, I can get that much? I’ll take it,’ where really the seller can get even more than that,” Cotlar said.
The market is ripe for such off-the-market deals, because there are far more buyers than sellers, making for a more aggressive, fast-paced environment. Within a day of listing an Aurora home last week, Steve Danyliw, an agent in Littleton, had shown it to 23 potential buyers and had six contracts — all above full price.
“If we didn’t have it on the market — exposed to all of those potential buyers — might’ve we sold that for less?” said Danyliw, a Denver Metro Association of Realtors board member. “You’ve got to make sure your seller is completely informed of any positives or negatives.”