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IS THIS A "POCKET LISTING"? AND HOW DOES IT BENEFIT MY MOM?

My mother owns a plot of land in southwestern Michigan. She has been working with an agent for three years trying to sell the property...

The agent just sent her a listing agreement to sign. The listing agreement had a section titled "Other Provisions".

Mom's "other provision" was that the "listing would not be placed into the MLS or otherwise advertised until the seller and the agent agree to do so."

The agent didn't think it would be a good idea for the property to "sit on the MLS"...

Hmmm.

Why would anyone sign this?

A buyer for my mom's land would have to know her agent...

Seems like it cuts out a large percentage of the market, doesn't it?

Yet my Mom wants to sell. I wonder why she hasn't...

Is this a "pocket listing"?

And how does it benefit my mom?

Ken

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Posted by Ken Tracy Naperville Illinois Real Estate on 05/14/2009 08:58 PM

Comments (56)

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Originally posted at: Ken's Naperville Real Estate Blog : IS THIS A "POCKET LISTING"? AND HOW DOES IT BENEFIT MY MOM?

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56 Comments on IS THIS A "POCKET LISTING"? AND HOW DOES IT BENEFIT MY MOM?

MAY

2009

Sounds really "pocket!" I have never heard of such an arrangement! I say - find another agent!

Ken,

Does the listiing agreement say MLS on it? Sounds very bizarre. I'm not sure how you can sell a secret listing.

Not advertised????? Does that mean not on the internet, not anyway.... nada??? Not good.

I have never understood the benefit to an agent to have a pocket listing. Sure, you can make more money, but your chances of selling the property quickly and for the best price are so diminished. I'm more than happy to share commission with someone if they are kind enough to bring me and my seller a qualified buyer. Was your Mom aware of this? I hope you stepped in and put her on the right path. Good luck to you both!

Ken...

A true pocket listing doesn't have anything signed, just an agreement. You mom's isn't much better ... sounds like this agent is not acting in her best interest. At least that's my opinion!

Are you kidding? There is NO benefit to your mom! THe only thing he has done is cover himself from being accused of having a "pocket listing"!

Hi Sarah, Richard, Lina, Judi, Jenny and Gary.

Thanks for commenting.

I didn't understand it when my mom explained it to me. She sent me the listing agreement.

I was confused/angry.

Anyway, thanks so much. You are confirming my thoughts.

Ken

Ken - I agree with the above comments. There is zero benefit to your mom in this case.

Where at in Michigan. Maybe I can help send you to a good agent. I am sure it is in the boon docks somewhere

It's definitely time for a new agent and a new marketing plan, Ken. I would refer it to an AR member and hand the referral fee back to Mom.

It doesn't benefit your mom at all. It only benefits the agent who is trying to double end it first, before giving other agents a shot at knowing it's available.

Ken, I know land is different than selling residential real estate, but thats a marketing strategy that won't be catching on any time soon. Rich

That listing is not good for your mother, at all. It obviously is good for the Realtor to have both ends of the transaction. May take a long time to sell.

Ha, that is a "not so funny one". I think the realtor should go back and look in the mirror and slap himself. It is time to wake up and smell the coffee. Pocket listing are worthless to both the seller and the listing agent. Problems begin with pocket listing as the buyer can really jack the seller around and not be qualified and no ---advertising? I think that might be a person who should not be allowed a real estate license.--

A listing agreement doesn't necessarily need to specify the "listing" being advertised in the MLS. An MLS listing agreement may be a completely separate issue from this particular contract/agreement.

As a matter of course the term listing may simply be semantic. If she signed an agreement that allows the brokerage company to market and sell the property she, in most cases will be bound by that agreement regardless of advertising medium.

Having said that however, after that long period of time it's probably appropriate for you to step in and help her. But I would use caution when attempting to cancel or terminate a legal contract. Legal counsel may be a good call...

Gene

No benefit for Mom at all. Find another agent!!

Is the listing agent in a R Association?

In ours, if we opt a listing out of MLS, we have to notify the Association with seller's signature that it is to be kept out. It defeats the cooperation agreement between members to be in an Association and not, well, cooperate (duhhh). :)

I'd say aside from a terminally ill tenant on an income property, a celebrity property or a hazardous site of some kind opening up showings to liability for the owner, having MLS would probably not be adverse to the seller's best interests.

That's not going to happen often.

We've held off on putting listings into MLS until they were market ready, though. Could this be just until the land is cleared or surveyed? (trying to interpret in a positive way) :)

Candice

Sounds like a pocket listing to me with a underhanded twist.

Our local board has a rule that all listings must be placed on the MLS within 3 business days of listing date or the agent is fined.

Gee, find your mom a good agent, get a referral fee. If you need help let me know. That is absurb in this day and age, well actually in any day and age.

"The agent didn't think it would be a good idea for the property to "sit on the MLS"..." Why? This doesn't make sense. I agree with Missy.

Call that Realtorand fire him. Find a new Realtor using the referral page here for your Mom and get the 25% referral fee. Plus you are really helping your mom

That's how you work this to your moms benefit and your own,

Good Luck

This does NOT pass the smell test.....in fact, unless the agent clearly explained WHY this type of listing agreement was being suggested (I cannot imagine how she could explain it as being beneficial to your mom!), I would suggest to your mom that she find herself another agent.....pronto!

You know what they say....if you get a definite feeling that something is not right, it most likely isn't!

Keep us posted!

Edith Schreiber - Dallas, Texas

There is nothing I can say that hasn't been said already. The only way for your mom to sell is to attract a buyer, and unless it comes up in a search, it will sit and sit and sit and sit and sit..

Hmm...funny thing with this is that I had never heard of a pocket listing before, but now with your blog and what you have described I can clearly understand what it is and why it is called such. That is awful. I wish your mother luck in finding a halfway decent, reputable agent.

OK, I do have to go against the majority this time...It really depends on the particular local market the land is located in and how many of those lots are currently listed on the mls, PLUS how this particular agent advertises their listings. In my very rural area we have literally thousands of residential lots due to one of the original real estate scams in Arizona. Many people purchased these lots sight-unseen and have held them for many years. Unfortunately many of these lots are actually inaccessible - there are no roads. And, in many cases these people could have purchased actual acreage in our area for the same price they paid for one lot.

I say all that to say this: often we do not recommend our sellers of these lots to list them on the mls. They sit there for years and then when a buyer does make an offer, it is literally about 1/5th of the listing price. Buyers figure the property hasn't sold, therefore they can pick it up for a song. This does not serve our sellers very well at all. What has worked, however, it to advertise the heck out of the lots on the internet, newspapers, e-flyers, etc. Always, we distribute complete information to other area agents and of course we do cooperate fully with any other agent who brings a buyer.

This works for everyone...the seller gets a fair price for their property, the buyer ends up paying a fair price and all the agents get paid. Is this a pocket listing? No, I don't think so. Just because a property is not on the mls does not mean the listing company won't cooperate or advertise the listing or even distribute the information on the listing to other companies. It really does depend on the actions of the listing agent. By the way, not every rural area even has an mls. We didn't until recently...the lack of an mls certainly did not make all our listings pocket listings.

Is this the case with your mother's property? I have no idea, but it sounds like it could be. Maybe some additional questions should be asked. I would certainly want to know the reason this agent has decided not to post the property on the mls, but if it's a good reason...

Sounds like a bad deal for your mother. Find her a more qualified agent.

Kellie made some very good points, and I suspect you should look at the overall picture of how the agent is marketing the property or if he is marketing the property. After 3 years though I think it is safe to say that you should get invovled and a little more proactive for your mom. I would vote against the referral fee though - 25% off the agent's commission may not be a big incentive to get the property sold. Is that deduction from his/her commission really in your mom's best interest.

Hi Ken... it sounds like your Mom found herself a doozie of an agent. I know you well enough to know that you are aware of what needs to happen here. Help your mom make a better choice this time and refer her to someone who will pay you a referral fee too!

I actually can think of several reasons not to list land in the MLS - if it was previously listed for years in the MLS something is obviously not working and that might be a reason to let it expire and try other marketing.

The most powerful tool I have is the MLS - but it is sure not the only way to sell land - so that's not a problem with me - it's the phrase "otherwise advertised" in the agreement that would concern me.

I'd need the whole context before I join the calls to fire the agent. And no, I wouldn't call this a "pocket listing". The agent is trying to get it in writing - perhaps the mom and the agent are on the same page and we just don't have all the facts.

Kent Davis

That does sound like it's not beneficial for your mother. Hope she can find a better agent!

Sounds like a secret pocket listing to me. Is there an expiration date on the listing, or has it been listed for three years as a pocket listing?

MAY

2009

Hi -- I'm thinking along the lines of Kellie Fitzgerald on this -- real estate is local and if the market is very bloated with tons of lots the agent may be thinking to take it out of MLS for whatever period of time the MLS requires before reentering it as a new listing.

I've acquired a lot for a debt payoff that I would dearly love to get rid of, but, our area and this particular subdivision has sooooooooo many lots for sale that I'm not even listing it at this time (it hurts as this is a private mountain community with some hefty yearly charges!) There have been lots for sale for 3-4 years in this community with new one's being added all the time. The investor "sharkies" are out to snap these lots up at a nothing price and so far most folks/owners are sooo insulted they aren't complying.

Sue

Perhaps property type has more to do with this than might first appear.

Kellie Fitzgerald of Chiricahua Real Estate has provided a rather enlightened comment.

It might serve you to simply pick up the phone and check in with the agent so you can better understand the market dynamics in that area for that type of listing.

Ken: Sounds like a sad situation.. when does the listing agreement expire ?

My thanks to Ken for the initial post, and to everyone else for their responses! I'm still realtively new to real estate and had never heard of a *pocket listing* before!

Thank you all for the education! It does pay to wake up to the AR site!

I tend to think that if it were in your mother's best interests that the agent would have the brains to confer with you on it. If I had a client my mother's age with a son in real estate, I'd involve them jst to cover my tush.

Fire, find another, hire.

I think your mom needs another agent or at lease a second opinion on the value of the parcel of land. Even in our rural market where things might be handled different than an urban market this does sound unusual.

I'm with the others who suggested you use the AR referral system and get Mom someone who will do right by her.

Time to say "bye bye agent".....what is she thinking...not much...not much marketing and I am guessing she comes from the double pop or no sale school and is about to flunk out !

Never keep a mother's property off the MLS and never tell her she sings out of tune. That has kept me out of trouble for years. But seriously folks, sounds like you have an old school double dippin' Realtor.

Sounds like someone want to control the lake and the fish. The only good reason to do that would be to place "pocket buyer" and Pocket both sides.

"listing would not be placed into the MLS or otherwise advertised until the seller and the agent agree to do so."

I have seen that on many listing agreements, NORMALLY followed by.. a firm date when the property would be put on the MLS, the reason was giving the property owner (usually a house) time to get the house ready and staged or minor repairs made, but securing the listing for the agent.

What your mom has is not a good thing, ask her to cancel it and re list with someone who will EARN that commission. WIth vacant land, most land buyers know they sit on the market much longer than a home, so MLS days wouldn't be a worry.

If it is listed but not on the MLS doesn't that make it an exclusive? Good for someone but probably not MOM!

Ken,

Does not sound like a good deal to me. Can you help her find a good agent to assist in selling the land?

Why would an agent want to hamper their efforts to sell it? Your mother needs to run away from this person and their tactics.

Ken, I say pick a new agent who is full time and really wants to sell real estate and not just list it!

Sounds like you need to call the listing agent and get all the facts. Once you have them then you simple do what is in the best interest of the client (in this case your mom).

Yes, a pocket listing. Why is the agent doing this? Do they think the property is overpriced? Sounds like your Mom or maybe you need to have a conversation with here. I would consider another agent.

It doesn't matter what you call it - it's a stupid way of doing business (NOT doing it actually!) -

My best to your Mom - get a new Agent for her FAST!

Hi Ken!
This sounds like an agent wanting to double end the sale...DON'T DO IT!!!!

Rather than rushing to conclusions, maybe this was a simple typo the listing agent made. Maybe this agent has a lot of buyers for raw land.

MAY

2009

I'm not a fan of listings that do not go in the MLS. If the listing agent is advertising, then technically it's not a pocket listing, but it certainly smells that way. As listing agents, aren't we supposed to get attention for properties...which generate showings....which generate offers?

I doubt any vehicle does a better job of 'advertising a property for sale' than the MLS where every agent looks to find properties for clients. I know when I'm looking for properties I don't drive around writing down signs and addresses, or look through endless pubs to find just the right property.

Hi Ken -- I would immediately fire that agent, and go to the broker and demand to be released. While a contract is a contract, I would take that up with the state division of real estate. I also would never sign a listing agreement longer than 1 month for vacant land.

In my area, land very often takes years to sell. We have remote parcels in very sloooooowly developing areas.

I've had a large parcel listed for 7 years - 12-18 months at a time and we formally renew. It is 4 miles from any utilities but 1/2 mile off historic Route 66.

It's been in escrow twice and both times fell out because of 'circumstance' (one time, the buyers decided to divorce and neither would relinquish their interest nor share it!) HA

It will sell but it will take time, money and at least 6 months of due diligence.

The owner's a NV broker and out of country a lot. So he is good with the arrangement, And it's in MLS, NLS and all over the internet . . . with a huge sign . . . :)

I personally have a parcel listed with an AZ out of area broker 2 years now. 1 year at a time listing. They're gonna take a while and I don't want the agents to have to renew me constantly. They keep me posted. I'll renew until it sells probably. The agents are doing a good job.

It's always interesting to see how RE is done differently all over the world. I love this topic and post!

Candice

MAY

2009

Wow. A Feature and 54 comments! Pretty cool.

Thanks for reading and voicing your opinions.

I have sent this post to Mom and am sure she enjoyed your responses...

Thanks again.

It is a beautiful day to sell a home.

Ken

MAY

2009

I did a pocket listing recently. We had a home that we were considering selling, but didn't want to alarm the neighbors. We put it up in a pocket listing since the house was near a house on a luxury home tour. We had good results and eventually found someone to rent it. It worked perfectly for us, but I'm sure that we're the exception and not the rule.

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