A pocket listing is a property that doesn't come onto the Realtor-funded multiple listing system until it's already sold -- a practice that's rarely defendable. In fact, it's looked down upon so much that your local MLS may have rules against it.
"pocket listings" do exist, but they are an unethical agent practice. A "pocket listing" is one which the agent keeps "in his pocket" and shows only to his best buyers. Since the agent has a fiduciary duty to get the highest price for the seller, he must publicize the fact that the house is for sale as widely as possible as fast as possible. If instead he only tells his favorite buyer to avoid another agent splitting the commission, he is acting against the interest of his client, violating his fiduciary duty to the seller. You should not deal with unethical agents who keep listings "in their pockets" either as a buyer or as a seller.
There's no law against them, and even though most MLS rules require listings to be submitted within a certain time frame, those same rules usually permit the withholding of listings per a client's written instructions. So pocket listings aren't illegal, and even pass muster under MLS rules if authorized by sellers. If a seller wants a listing withheld from the MLS that's his or her right.
The problem arises when listing agents don't get informed seller consent to "pocket" a listing. Even in a hot market, the benefits of MLS exposure are hard to deny. A listing agent desiring a pocket listing should be upfront about this; some sellers will still be fine with pocket listings. But if your seller can't see the value in keeping his or her property off the MLS, neither should you.
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