First thing you should know is this: The real estate market in Nicaragua does not operate under a Multiple Listing Service (MLS).
For those of you not familiar with a MLS, it’s simply a large database of properties for sale and is accessible by all active real estate agents. It’s widely used in the USA and Canada and underpins all broker collaboration and compensation in those markets.
A MLS is great for buyers because they don’t have to visit multiple agents to get a handle on what is available for sale. All they need to do is walk into one agency with a list of criteria and they’ll get access to ALL properties that fit their investment goals.
A MLS is great for sellers because all you need to do is list with one agent and you can be sure that other agents will have access to your property details and can show your property to their buyers.
Not so in Nicaragua. As there is no MLS, things work quite differently on the ground and there is far less collaboration between agents.
Welcome to a world without a MLS
As sellers operating in this market, there are 4 important implications that you need to understand.
This stuff can get a bit technical and involved. So please bear with us while we go over it. If you are motivated to sell your property it’s vital that you understand how the local market works.
So lets get started:
1. Your property won’t be uploaded to a central database that all agents can see
If you list your property with one agent, it will be added to their private listing database. And that’s it. No other agencies will get the details. They won’t know it’s for sale.
There are two reasons for this. First the agent doesn’t want to provide too much public information (particularly location information) for fear that other agents will ‘steal’ the listing. And second they want to reduce the risk of the buyer being able to go direct to the seller (you), cutting them out in the process.
They’ll only release detailed information in situations where they are in complete control of the buyer. Which also explains why marketing tends to be cursory, as we explain in the next point …
2. Marketing by local agents is often cursory
In the absence of an MLS ‘open listings’ (aka ‘non-exclusive listings’) are the norm. This means that the property is available for sale by any real estate agent, but only the person who brings the buyer receives the commission. On the surface this may seem fine, but the result is that agents have to pursue a volume approach to listing property – hoping to sell any property – rather than investing in marketing a particular listing for sale.
You see, any time and money they invest in marketing an open listing could easily go un-rewarded if someone else sells the listing first. (And remember, it’s not only formal agents who show real estate in Nicaragua, so agents will also be worried about taxi drivers, hotel receptionists and other real estate ‘actors’ beating them to the sale).
So, understandably the marketing most agents do is generic (such as local print advertising for the company and generic listings covering an entire development) and not focused on a particular listing. In many ways they act more like buyers agents than listing agents which also explains our third point which is that …
3: Exclusives don’t work very well in Nicaragua
You may think the way to get an agent motivated is to give them an exclusive listing and ask them to share the property information with other agencies (as is the norm in the US). But this is not your best strategy in Nicaragua. At best you’ll get the marketing exposure that one agency can drum up. Even if your agent does let other agents know about the listing, they’re unlikely to generate any leads.
Because agents in Nicaragua are accustomed to receiving full commissions. With an exclusive listing the commission is shared between listing agent and buying agent, each agent effectively receiving a half commission. So everyone will see the property as one that does not pay a full commission for essentially the same amount of work. Agents will be more motivated to sell one of their open listings where there is no third party expecting a commission share.
Furthermore, in an unregulated marketplace there is always the concern that commission splits will not be honored at the time of closing, so many agents simply don’t want to risk not getting paid..
4: Things get even harder if you are trying to sell a property within a real estate development
This is because you’ll often be competing against developer-direct listings.
Of course you’d like the developer to include your property on sales tours of their development, but they are unlikely to do this if they have their own inventory to sell. Real estate agents also tend to go along with what the developer wants (i.e. promoting developer direct listings only) in order to maintain a positive long-standing relationship with them. After all, the developers have more inventory to sell (and hence more commissions available) than you do.
OK enough about the intricacies of the market: Here’s what you need to know in a nutshell:
- In the absence of an MLS, real estate agents act more like buyers agents than listing agents.
- Keeping your listing open will get you more exposure by more agents.
- It’s especially hard to sell a re-sale in a development.
- It makes sense to list your property in as many places as possible.
Don’t lose sleep over this, we’ve got some solutions to share with you. If you’re signed up, you’ll receive the information automatically via email. If you have not signed up to our Seller’s information, head over here to get the free report and accompanying e-course.
P.S. If you would like more detail on how the market works on the ground in the absence of an MLS, check out this slideshare presentation.