Are Hip Pocket Listings Really A Good Thing?

Pocket listings are not in the best interest of the sellers.  The more folks that know that it is available the quicker it will sell.

Tom:  This may come out of left field, but I am wondering what might be the reaction if a "minority buyer" or one in a "protected class" who was looking in somewhat of an "exclusive area"... and had been looking there for a very long time... and then saw a very nice home that he/she would love to have purchased... being moved out of by the former owner, and moved into by the new owner.

I would think when they saw that... they might be giving their attorney a call.  Does that sound far-fetched to you?

I agree that in most cases, pocket listings are not in favor of the sellers. Yet to the dismay of hardworking buyer's agents who "can't get an offer in edgewise", listing agents continue to double-end deals, in many cases below what a buyer would have paid on open market. And sellers don't know better...

I have to assume that the Realtor is working the best interest of both her seller and her buyer. But when a buyer gets a lower price when there is no competition because no one else knows about the property, then by definition the seller is also getting that lower price. If the seller is represented by that same Realtor, then something ain't right.

 

I would bet if the states that still allow dual agency get rid of that option we will see alot less pocket listings. I truly do believe that more listings are 'pockets' for the agent than the are for the seller.

Karen Anne rasises some very interesting things to ponder in #71.  If one is going to hold a listing in their pocket, I think it would serve the agent well to document that they have given the seller full disclosure.

If I could comment on #74 - dual agency is there for a reason.  Dual agency relates to a broker as well as his agent.  I have no issue with the so called "chinese wall" between a listing agent and a buyer's agent from the same office (therefore the broker of record is a "dual agent"), or in situations where a pre-existing buyer agency relationship exists between the agent and her buyer client, which in turn results in dual agency if that buyer purchases one of that agent's listings (but notice and consent must be served on both parties).

But pocket listings are not in the best interest of the seller client, in most circumstances, so unless instructed otherwise, trying to sell the home in a direct or dual agency capacity is probably not a good idea for the reasons listed above by everyone.

I agree that pocket listings are not a good thing.  I would assume that most MLSs have a requirement that all listings be submitted.  One really does their seller a disservice by not giving the property the correct exposure to the market.

Tom - I totally agree with your comments.  Nothing p's me off more that to see the perfect home for one my buyers get placed into the MLS and put under agreement on the same day.  There is one particular agent in our MLS that is notorious for this...

Maybe I am naive.... but when is a pocket listing a good thing for anyone other than the agent?

Also, in out state as a member of the MLS no property can be shown till the listing start date.  I guess you have 24 hours to put it in... but her in Massachusetts I also see listing come on as Underagreement or active showing for backup as soone as they are activated in the MLS.

I know a lot of REO agents that do this but it is a really bad for the banks and investors as they lose a lot of money, but no one even our government cares. I see banks, Fannie Mae and Freddie Mac lose at least 5k a deal and that is very conservative.

Tom ... I agree with you ... .we have a fiduciary duty to do what is in the best interest of or client and not is what is best for or own gain .... pocket listings in my opinion are wrong in the least and could open up agents to lawsuits ... just not worth it

Yeah, being primarily a Buyer's Agent, I believe the listings should go out to the MLS as soon as required by the rules. Barring a seller's request, the listings should be posted as soon as possible. I also believe it is in the seller's best interest to expose to the maximum number of potential buyers. Most MLS Services require posting a listing within a certain period of time and there should be few exceptions. 

Hi Tom,

The term 'pocket listing' has an intrigue about it that some of my buyers have talked to me about.  Not sure if it is a good thing or bad thing sellers.  After all sellers want their homes sold.  Great post.  Best of success to you this year!

Pocket listings sales (“off MLS “) are becoming the new school of thought for real estate in different markets and states across the U.S. Until recently, off-market sales were typically luxury listings, uber wealthy and celebrity trades. Although that demographic is still the most active in the pocket market, it’s quickly expanding to everyone and it’s more than a trend. So what’s behind the shift? First and foremost, technology is rapidly changing the landscape of real estate, not as quickly as other industries, but it’s happening. The days of sharing real estate information only through MLS are gone, long gone. Real estate professionals must use the new channels of marketing to stay relevant, have a competitive edge and keep their sellers happy. By channels, I mean digital and mobile: email marketing, social media, sharing, SMS alerts, visual (Pinterest, Instagram), augmented reality, video, blogging and so on. Real estate marketing of today is about sharing, engagement, interactivity, and story telling with rich and relevant content. It’s far beyond the days of just posting your listing to the MLS. For the professionals that swim in the top agent pool (and use that as a selling point) their membership networks allow the sharing of listings amongst their group and again, not searchable to anyone outside of that network. It’s doesn’t offer much more of a benefit than a ineffective mass email or sharing at an office meeting. Lastly, brokerages and agents are increasingly frustrated with the inaccuracies of listing aggregators like Zillow and Trulia and the “ownership” of their data by these sites. Without cutting off the listing feed (which would be detrimental to most), brokerages will never fully own their data, unless they buy it back from the aggregators. Brokerages and agents that “get it” will A. never buy back their own data and B. inevitably seek alternate and supplemental listing dispersement solutions and new technology. These alternate/supplemental solutions to bridge this gap are few and far between; and that’s where PocketListings.net comes in. PocketListing.net Founder, Alexander Clark: “The argument for skipping MLS is always the same, “You gotta expose your property to MLS to get the best price.” We’ve heard it a thousand times over. It’s simply not true. That is the old way of thinking. The new way of thinking is that a good price is what a buyer is willing to pay, and what a seller is willing to accept, and exposure can come from any number of online or offline channels (Facebook, Twitter, LinkedIn, Instagram, Pinterest, email, etc.) None of these companies or “social networks” existed when MLS was created, neither did the Internet! MLS was designed prior to the internet and the free and open exchange of information and and WAY before social networking. We envision an age where licensed real estate professionals are connecting through multiple channels and creating relationships with colleagues and clients alike that foster transactions from one person to another regardless of whether it’s “on” or “off” the market. If your home or property is for sale, it’s “on” the market. It’s as simple as that. And if you get the price you want, the rest is irrelevant.” Pocketlistings.net

I see this a lot...especially with short sales. What I see happening is, the agent has the listing, gets a buyer either themselves or in the office, then they put it in the MLS, with the agent remarks saying an offer has been accepted and submitted to the bank for approval. Agents know that in order to do a short sale the property has to be listed on the MLS...but there is no limit to how long the property has to be on the market for. When you see the MLS, the day the house was listed and the day the house hit the MLS is usually 7-10 days apart. Now is the agent having the seller sign the addendum to withhold from the MLS and informing them that they will find a buyer? If so, with this being a short sale, wouldn't the bank have a right to know that no one else had a chance to submit an offer? This happens a lot with investors looking to flip a property paying all cash. They know the best way to get their offer accepted is to work directly with the listing agent.I do believe, it is affecting the market.