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JANUARY 2014 • VOLUME 18 • ISSUE 9
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Got a listing in your pocket? Find out what's legal and what's not By Stacy Hale
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ocket listings have been a sticky topic in real estate blogs lately, with many agents concerned about the legality of such a practice. “Pocket listing” is just the general term for any active listing that is not on the Multiple Listing Service (MLS). The seller’s agent assumes the exclusive right to sell the property and markets it off the MLS, hence it is “in their pocket.” There are many reasons sellers and their agents choose to keep their listings
private or semi-private. Potential questions of legality and ethics tend to center around how the listing is attended throughout the selling process, so there are some precautions to take with pocket listings. Here are some legitimate reasons that choosing to market a listing off the MLS (at least for a time) could be beneficial to the homeowner.
The homeowner is not sure he/she wants to sell Sometimes a pocket sale is the result of a casual agreement between an agent and a homeowner who is not completely committed to selling. In this case the homeowner may decide to test the market: “If you find me a buyer at the right price, I’ll consider selling.” Since the market is hot right now, it can be easier to negotiate a sale privately than to go to the expense of fixing it up, staging it, marketing it and having open houses—especially if the homeowner is on the fence about selling. A pocket listing can also be a viable way to test the price and beat the “days on market” ticker if there aren’t a lot of comps. If the price seems too high, they can lower it without a public price reduction.
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Homeowner wants to sell privately Celebrities, public officials, people with young children, the elderly—and anyone who would rather not have to make a hasty exit for a showing or have pictures of their home on the Internet—may choose to under-expose their listing when privacy is a concern.
An offer was made during a “prelisting” period Technically, a listing can be called a pocket listing in the time between when the sellers’ agent secures the listing and when it appears on the MLS. For instance, if the listing sold to someone who knew about it outside the MLS (a buyer known by the listing agent, friend of
the seller, someone who works with the listing agent), or if it sold before the MLS paperwork was completed.
“Coming soon” scenarios Sometimes listings are pre-marketed through the brokerage and the agent’s social media network to drum up momentum and keep the seller happy while the listing is prepared for the MLS. Or, an agent will file an exclusion to give sellers more time to prepare the property. These practices can help to solidify the contact and provide attentive service to the seller: while the agent is giving the listing the official workup for the MLS (setting up photographers, virtual tours, preparing a marketing plan, completing paperwork), they are also quietly marketing the home. The seller’s agent lets her office agents know about the listing, alerts her buyers, and posts the listing on social media to create excitement without losing time to the process. Many sellers love the idea of possibly selling before the listing even goes up on MLS, if the price is right. Pocket listings have traditionally been more common at the upper end of the market, but now that inventory is declining, they can create a sense of urgency that generates greater buzz for a listing. Still, there are some questions and concerns about whether the best interests of the sellers, buyers and the market at large are served by pocket listings—especially when they are being used to generate sales between brokers of the same firm. Here are some areas where pocket listings get tricky, and when it is best to cover all your bases. In cases where the agent keeps the listing internal and “double-dips” on commission Critics of pocket listings say that some agents may be tempted to keep the entire sale
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