Stump the Stammtisch: When new developments begin listing on MLS, is this a sign of a weakening in sales?

This is a very good question that recently came from a reader. Let’s see if our Stammtisch can help her out. If you don’t know the answer, maybe someone next to you does. If we get stumped, we’ll find someone who can help.


I saw your blog and have a question for the experts…

What is their opinion when they see new developments start listing properties on the MLS? Is this a general sign of weakness in sales?

For instance, I noticed 310 Townsend has quite a few listings on MLS and it seemed to coincide with their reduction in price and incentives.

Likewise, the Berry street properties and King St. properties in Mission Bay area also have quite a few listings on MLS and word seems to be that they are having a hard time moving their last batch of inventory…

Now I noticed the Radiance, the new property on the other side of Mission Bay… at first word was there were lots of reservations, etc but now they have a listing on MLS…. I’m wondering if that means they may start offering incentives etc.

Or maybe developers just naturally list inventory on MLS since it would reach the most people? If so, then why do they not list inventory when they first release.



Please submit your answers in the form of a “comment”. Any solicitations for business will be quickly deleted. ;-)

Thanks for asking T, and thanks in advance to any and all people that help you out.

4 thoughts on “Stump the Stammtisch: When new developments begin listing on MLS, is this a sign of a weakening in sales?

  1. T,

    I have to run out the door, so I have to be quick with my answer. I don’t think it is necessarily a sign of weakness. It has been my experience that sales offices typically sell units themselves (hopefully cutting Realtors out of the equation and not having to pay commission, thus saving the developer some hard earned cash), and then they throw them on MLS when the initial rush has passed. Think about how much money a developer is saving when they don’t have to pay 3% commission on however many units they sell without being in MLS. As for their motivation, and reasoning, I don’t know. It’s just like any marketing campaign, I guess. Do what you can up front to maximize profit, then do what you can to clear inventory. I wouldn’t be surprised if the iPhone does something similar.

    With the amazing amount of new developments springing up, it’s no surprise they aren’t 100% sold, but it is totally surprising how much have “sold” (been reserved) and how quickly it all happened. It’s always the pick of the litter that goes first, and there is nothing unusual about having to provide incentives to get rid of some of the “less desirable” units.

    Hope this helps. Thanks for writing in. I got to run….


  2. Especially for large projects you will generally see a few listings on the MLS. I think The Mark Company (who specialise in new development) always puts them up. Look for what kind of incentives they’re offering — that’s a better indicator.

    I am hoping to join the MLS committee of the SF Board of Realtors next year, with the goal of adding a separate category on the MLS just for new development sales. As it is now I find it gives a misrepresentation of the market to have pre-sales mixed in with resales. They should be de-mixed.

  3. Thanks for the insight… I guess then it wouldn’t hurt to ask for incentives before signing the contract even if developer says they are not offering incentives….so far they’ve only listed 1 out of the 100 they have for sale, maybe not a sign then of weakness.


    [Editor’s note: Absolutely ask for incentives! You should do that on any new development anyway…I would. Thanks for writing in, reading, and commenting.]

  4. That is a very good question and very observant. In the beginning, these types of developments have sales staff dedicated to their project so the developers are not interested in cooperating with agents because of the commission they have to pay a cooperating broker. Some even make it more difficult for other agents to be paid for clients they may have been working with for years. If the client goes to the project without their agent and is registered with the developer’s staff, then the developer will not pay the agent a commission. For this reason it is not in the MLS as they would have to abide by the SFAR rules which does not allow the developer to refuse to pay a cooperating agent whether the client had registered with the developer or not.

    However, as the project winds down less units are available and may be harder to sell. Also, people who had reservations may have dropped out. So to get these last units sold, the remaining ones are put on MLS. By that time, developers are ready to move on to the next project. This can be a great time to get a good deal. At the beginning of the project developers are less willing to make concessions unless the market is slow and units are not moving. As the project is being sold out, the developer wants to sell the final units because this is where the profit is usually made. For instance, The Potrero is offering incentives for buying units now, though they have not finished the building yet are over 60% sold. Even so, they are offering a reduced price on some units and throwing in 2 years of dues, a refrigerator and washer and dryer, a value of close to $15,000.

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