When you decide to sell your home and sign an agreement with an agent, one of the first things your agent will do is list your home on the Multiple Listing Service (MLS). The MLS is the database of homes for sale where agents share listings with one another. These listings are then shared broadly to real estate search sites, including Redfin.com, where buyers can see available homes for sale.
But what if you didn’t want your listing to be publicized on the MLS? In this case, you could decide to sell your home as a pocket listing.
So what is a pocket listing? Let’s dive in to discover how pocket listings work, pros and cons for buyers and sellers, and recent discussions surrounding Clear Cooperation.
What is a pocket listing?
A pocket listing (aka “whisper listing” or “office exclusive”) is a property for sale that is not listed on the MLS. Instead, the agent keeps the listing “in their pocket,” offering it privately to select buyers or agents in their network. These listings are considered “off-market” and not marketed to the general public.
This method can provide privacy for the seller, but limits exposure to potential buyers, among other downsides.
Pocket listings are discouraged by the National Association of Realtors (NAR) under their Clear Cooperation Policy (CCP), which applies to all NAR-owned MLSs. Most MLS’s also require that brokers submit listings to the MLS promptly after the seller signs a listing agreement. However, there are some cases where pocket listings are allowed.
How a pocket listing works
When a seller hires a real estate agent to list and sell a property, they typically sign a contract that obligates them to work together, called a listing agreement. Then, the agent will list the property on the MLS and begin marketing. Per NAR’s Clear Cooperation Policy, the agent must list their client’s property within one business day of when they began publicly marketing it. This is to promote cooperation between the seller and their agent, and a buyer and their agent.
However, with a pocket listing, the agent keeps the property off of the MLS and doesn’t publicly market it, limiting exposure to buyers within the agent’s and seller’s networks. This approach bypasses the broader market and is typically reserved for specific cases, such as divorces and family deaths. Ultra-high net-worth individuals and public figures may also opt for pocket listings to maintain privacy and exclusivity.
Pros and cons of pocket listings for buyers and sellers
Here are some important pros and cons of pocket listings to keep in mind.
Pros:
- Select buyers gain access to exclusive properties, giving them a competitive advantage.
- Sellers maintain strict privacy and control over who views their home, which can be appealing for high-profile or luxury properties.
- Fewer people walk through a seller’s home, limiting disruptions to their schedule.
Cons:
- Buyers miss out on broader market access, limiting their ability to compare properties and potentially driving inequity.
- Sellers face reduced visibility, leading to fewer offers and potentially lower sale prices.
- Pocket listings undermine the Fair Housing Act by restricting access, favoring those with connections, and eroding trust in the real estate market.
Are pocket listings legal?
Pocket listings are legal, but agents who belong to an MLS are subject to their MLS’s specific rules and regulations. Sellers who desire privacy in their sale can opt to have their home entered into the MLS so other agents can see it, but not syndicated to real estate websites (though not all MLSs allow for this). A seller can also direct their agent to make the listing an “office exclusive,” where the agent can only share the listing with other agents at the same brokerage.
In short, agents and REALTORS® can still use pocket listings, but Clear Cooperation stipulates that they can’t publicly market the property (i.e. on social media, yard signs, or emailing) without adding it to the MLS. Sharing it with other agents within their brokerage is allowed. As a result, this tends to benefit large non-franchise brokers because they can share with a wider agent network.
Pocket listings are more common in competitive markets or for luxury properties where discretion is important. This is because they allow sellers to control who views their home and can reduce public foot traffic or speculative buyers. However, the limited exposure may restrict the pool of potential buyers, which studies show impacts the selling price or timeline.
The National Association of Realtors heavily restricted pocket listings in late 2019 as part of its Clear Cooperation Policy, which aimed to promote fair housing, improve data quality, and bolster cooperation. Notably, the policy still allows private, unlisted properties (pocket listings) under certain circumstances, such as when sellers request confidentiality.
What is Clear Cooperation in real estate?
Clear Cooperation is a policy established by NAR in 2019 to restrict the use of pocket listings and promote equal access to housing.
Clear Cooperation requires real estate agents to submit a listing to the MLS within one business day of publicly marketing the property. This ensures that all buyers, regardless of their connections, have equal access to available listings, promoting fairness and transparency in the housing market. By restricting pocket listings, the policy aims to prevent exclusionary practices that could limit access to certain properties and ultimately compromise fair housing.
While the policy was designed to create a more open and cooperative marketplace, it has faced criticism that it limits sellers’ options and may not always serve their best interests. Violating Clear Cooperation also comes with stiff fines and penalties. Now, in wake of the industry-changing commissions settlement, there are renewed efforts to overturn it.
Pocket listing controversies
Pocket listings have been gaining popularity recently, but have been slowly growing for over a decade, especially in hotter markets. The industry took notice, and NAR effectively banned the practice in 2019 via its Clear Cooperation Policy.
However, following NAR’s industry-wide settlement and subsequent rule changes that went into effect in late August, opponents of Clear Cooperation have been calling it into question. Some have said it is anticompetitive, while others say it’s a worse deal for home sellers and against the fiduciary duty of agents to act in their clients’ best interest. Some opponents say that their campaign is to save the industry from another antitrust lawsuit – one of which is now going through the courts.
Redfin supports Clear Cooperation
Redfin believes that Clear Cooperation is fundamental to a fair, collaborative, equitable housing market where anyone can find their dream home. We believe that ending Clear Cooperation is only a win for big brokers – and harmful to consumers, agents, and fair housing. It’s just another way to devalue the MLS and give the power to the biggest players who can hoard their inventory.
Glenn Kelman, Redfin CEO, had this to say in his op-ed: “If the Clear Cooperation policy is overturned, agents may feel pressured to join larger brokerages, even if it means accepting lower commission splits, to ensure their clients have access to all available listings. When a single company dominates the market, smaller brokerages struggle to compete.”
At its worst, ending Clear Cooperation could take us back to an exclusionary past. Studies have shown that buyers most likely to lose access to pocket listings are buyers of color, violating key tenets of fair housing. This is a major reason why Redfin supported the passage of Clear Cooperation in 2019 when pocket listings were on the rise.
Clear Cooperation isn’t airtight, and has some notable loopholes. Agents at the same brokerage are allowed to share private listings with each other while withholding those listings from other brokerages. But a policy with loopholes is much better than no policy at all.
Other proponents for Clear Cooperation include industry leaders eXp Realty and Zillow. They agree that ending Clear Cooperation would be terrible for consumers and agents and could erode public trust in real estate professionals.
Pocket listings: what’s next?
Pocket listings have been part of the real estate industry for decades, but have recently taken the spotlight. While they can provide privacy and exclusivity, they also raise concerns about fairness, transparency, and limited market access.
Clear Cooperation attempts to balance these concerns, but the future of pocket listings remains a topic of debate within the industry.
Redfin has long supported an open marketplace and will continue to advocate for more transparency, better deals, and equal access to listings for consumers. We believe that fair housing is fundamental to a thriving and equitable society, and that ending Clear Cooperation threatens these ideals.
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