In our prior blog post, we explained what pocket listings are, and how they are a disservice to both home buyers and sellers. As a quick refresher, a pocket listing is promoted to other agents before it’s marketed to the public. The objective of a pocket listing is a fast offer and an easy, and potentially higher, commission for the listing agent.
Before going further, we must point out the difference between a pocket listing and an exclusive listing. An exclusive listing is used by home sellers who wish to keep things confidential – celebrities, political figures, and so on. This type of listing contract gives the agent the exclusive right to market and sell the property; ideally, because he or she has a client network that is similar to the homeowner’s financial strata and social sphere. The listing never becomes mass marketed, but this is by the homeowner’s wish.
In contrast, today’s pocket listing is a practice that can happen without the homeowner’s knowledge or consent. At best, an agent might promote his or her “broker previews” as a marketing tactic, without disclosing the downsides.
The National Association of Realtors does not forbid pocket listings. You can read NAR’s stance on pocket listings here. The obfuscation of the issue is worsened by their comparison of pocket listings to exclusive listings.
MLS organizations are recognizing the prolific rise of pocket listings. In an effort to keep some control of listing data, several MLS’s are setting up “private social networks” so that member agents can swap pocket listing information with each other.
In effect, this creates an MLS underground that enables the buying and selling of property while keeping the public out of the loop. You can read more in this article, “San Francisco Bay Area MLSs to share ‘coming soon’ and pocket listings.”
The real estate industry does not offer any transparency on the practice of pocket listings. There’s no tracking or statistics, so it’s impossible to say what impact they have on home prices. It stands to reason that pocket listings contribute to lower home inventories while allowing listing agents to sell properties with virtually no marketing effort or cost. This savings, however, is not passed on to the home seller nor the buyer!
Your Exclusive Buyer Agent is a member of local MLS organizations and can discover pocket listings that may be in the system. Even better, your EBA can also show you For Sale by Owner and new construction homes, whether or not they have been listed on the MLS! And unlike typical agents who may pressure you to make a quick decision, your EBA will always provide you with a fiduciary representation that protects your best interests.