Not all real estate markets are created equal. The differences are fundamentally based on the principle of cooperation.
International real estate authority, Carlos Matias, explains that the primary difference across global markets is rooted in the presence or absence of systems and policies based on cooperation. As Founder of leading global real estate technology companies, GryphTech and Phoenix Software, Carlos has 20+ years of experience helping global real estate companies in over 60 countries grow and is uniquely qualified to understand this.
According to Carlos, four of the most significant challenges unique to real estate markets outside North America are as follows:
1. Lack of Systemic Cooperation
Without an MLS system, associates are reluctant to cooperate, buyers struggle to know what is on the market, and sellers have limited property exposure to generate a quick sale at the best price. With more than 800 MLSs in North American real estate, broker cooperation is the norm and broadly perceived as beneficial for both sellers and buyers. Sellers benefit from increased exposure for their properties and buyers benefit from access to all MLS-listed properties while working with only one broker. Whereas outside North America, there are very few areas with an MLS, so brokers, as a rule, do not typically share their listings. As a result, the way in which consumers search for, buy, and sell properties and associates service their clients varies significantly.
As an example, a few years ago Carlos experienced this challenge first-hand when looking for a property to purchase in Portugal. To begin his search he traveled to Portugal and walked into a real estate office asking to see some local listings. He was shown only three or four listings represented by that agent and when he asked if there were any others he was pointed to another real estate office down the street. When walking into this second office, Carlos was again shown just a handful of listings and directed to yet another office a few streets over to see if they had additional listings. This was clearly not the most efficient model from a buyer’s perspective nor did it serve the seller’s best interests.
When competitors cooperate it benefits everyone involved in the transaction. It also provides for maximum exposure of properties, which is good for both buyers and sellers. Without an MLS, brokers create their own separate systems of cooperation, fragmenting rather than consolidating property information. This fragmentation inhibits the amount of exposure each listing receives and limits referral opportunities between associates.
2. Open Listing Agreements
Open Listing Agreements limit seller opportunity due to the costs of undedicated representation and misguided buyer perceptions. Unlike North American markets where exclusive listing agreements are largely the norm, in the majority of markets outside North America, open listing agreements are commonplace.