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Pocket Listings Can Be Legal but Are They Ethical

By Kristin Hamilton CA REALTOR

Real Estate Agent with Berkshire Hathaway California Realty DRE #01492138

April 24, 2015 10:56 AM

Pocket Listings Can Be Legal but Are They Ethical

First of all, let me explain what a pocket listing is for anyone who doesn't know. It is a listing agreement taken by an agent but with the understanding of the seller and agent that this listing (Residential 1-4 units) will not be put into the MLS system. In CA, there is an OPT OUT form (SELM) which must be signed by the Seller and Broker and sent to MLS or Local Board of Realtors Assoc within 48 hours.

The MLS is a huge database of current listings and therefore a great exposure for the seller's property. Also once put into the MLS, then the listing is pushed out to other websites for even more exposure. If the seller doesn't want the property in the MLS, you must ask why? Usually the seller is anxious to sell and wants as much exposure as possible. Or... is the agent trying to keep the listing off MLS so they can sell it and collect both sides of the commission.

It is my opinion that putting the listings in the MLS (Multiple Listing Service) is beneficial to the seller and to prospective buyers looking for homes. Also with multiple offers a reality in this market, the seller may net more with counter offers to several buyer's agents.

Pocket Listings tend to stay on the market longer, receive less offers, lower priced offers, poor advertising opportunities and the results are pretty clear that they end up selling for a lower price then comps in the same area.

Real Estate agents have a 'Fiduciary Duty' to their clients so is a "pocket listing" in their clients best interest? I personally feel it is a violation of the National Association of Realtors ® 'Code of Ethics' and also a violation of the Fair Housing Guidelines as well.

What is your opinion on pocket listings?

Thanks for Reading my Real Estate Blog.........

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Debbie Laity

Cedaredge Land Company - Cedaredge, CO

Your Real Estate Resource for Delta County, CO

I can see a place for them, but I'm not really in favor of them. I have one, but I also have a feeling this person has told several other agents about this listing. There isn't an agreement. I was just approached with the information. In most cases I really don't see a point in them for the reasons you mentioned above.

Apr 24, 2015 11:56 AM

Lou Ludwig

Boca Raton, FL

Lou Ludwig

Ludwig & Associates - Boca Raton, FL

Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Kristin

Pocket listing are becoming a problem with the MLS and the real estate business.

Good luck and success.

Lou Ludwig

Apr 24, 2015 12:31 PM

Teri Pacitto

Westlake Village, CA

William Feela

WHISPERING PINES REALTY - North Branch, MN

Realtor, Whispering Pines Realty 651-674-5999 No.

Unless we have a listing contract we can't promote a home or land so having it as a pocket listing doesn't work well here.

Apr 24, 2015 12:31 PM

Kathy Streib

Cypress, TX

Home Stager/Redesign

Kristin- it seems to go against an agent's fiduciary responsibility to their client, doesn't it. I'm not sure I see how a seller would benefit from it.

Apr 24, 2015 12:34 PM

Kristin Hamilton CA REALTOR

Berkshire Hathaway California Realty - Beaumont, CA

(909) 557-6966- Specialize 55+ Communties Banning

Hi Debbie Laity

Our CAR Residential Listing Agreement goes into detail the fact that sellers should seriously consider NOT checking the box to exclude from the MLS. Obviously NAR works will all 50 states to give buyers that option. I cannot imagine not putting a listing in the MLS. You do not want to be a Secret Seller!

Apr 25, 2015 04:16 AM

Kristin Hamilton CA REALTOR

Berkshire Hathaway California Realty - Beaumont, CA

(909) 557-6966- Specialize 55+ Communties Banning

Hi Lou Ludwig

I am sure they are a big headache for NAR, the State Organizations and local real estate boards. But maybe a big plus for real estate attorneys!

Apr 25, 2015 04:18 AM

Kristin Hamilton CA REALTOR

Berkshire Hathaway California Realty - Beaumont, CA

(909) 557-6966- Specialize 55+ Communties Banning

Hi William Feela

It seems like the selling agents for pocket listings are more concerned with their commissions vs their sellers and fellow agents.

Apr 25, 2015 04:28 AM

Mary Thompson

Flowery Branch, GA

Kristin Hamilton CA REALTOR

Berkshire Hathaway California Realty - Beaumont, CA

(909) 557-6966- Specialize 55+ Communties Banning

Hi Kathy Streib

I totally agree and would not feel morally good about it plus I would run the risk of someone going to the local board.

Apr 25, 2015 04:29 AM

Chris Ann Cleland

Long and Foster Real Estate - Gainesville, VA

Associate Broker, Bristow, VA

Some sellers want that pocket listing to remain pocket. They don't want every Tom, Dick and Harry through their homes. I personally think the MLS is best way to go, but I do see sellers requesting this of their agents. And we are to do what they desire.

Apr 25, 2015 05:58 AM

Kristin Hamilton CA REALTOR

Berkshire Hathaway California Realty - Beaumont, CA

(909) 557-6966- Specialize 55+ Communties Banning

Hi Chris Ann Cleland

Yes I think we have to follow our sellers wishes but I feel maybe the idea doesn't always come from the seller and maybe the agent?

Apr 25, 2015 11:43 AM

Hannah Williams

HomeStarr Realty - Philadelphia, PA

Expertise NE Philadelphia & Bucks 215-820-3376

Kristin Hamilton CA Realtor I think agents should cooperate with their fellow agents I can understand showing a buyer the listing agent may have first but that is it . Otherwise cooperation should be explained to the seller and done

Apr 26, 2015 12:43 AM

David Shamansky

US Mortgages - David Shamansky - Highlands Ranch, CO

Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Personally I dont like them as I think it does a disservice to the seller. If the property is that hot then let buyers compete for the place and maximize the sales price instead of holding out to only offer to 1-2 select people

Apr 26, 2015 05:11 AM

Kristin Hamilton CA REALTOR

Berkshire Hathaway California Realty - Beaumont, CA

(909) 557-6966- Specialize 55+ Communties Banning

Hi David Shamansky

Exactly right and the seller doesn't get the best price and probably not good service either.

Apr 26, 2015 11:41 AM

Kristin Hamilton CA REALTOR

Berkshire Hathaway California Realty - Beaumont, CA

(909) 557-6966- Specialize 55+ Communties Banning

Hi Hannah Williams

I remember when I worked with a large office before, at our weekly meetings we might mention that we had a house coming on the market in a couple of days in a particular city at a particular price range. Then if they had a buyer, they could get ready (type offer in template, comps, prequal letter) but I never revealed the address until I put it into the MLS.

Apr 26, 2015 11:45 AM