Last month, during its annual meeting in San Francisco (where else?), the National Association of Realtors voted to ban a practice known locally as “pocket listing,” in which listing agents — for a number of reasons we’ll go into in a bit — either keep available properties off of the Multiple Listing Service or delay in putting them on the MLS, making them available not to anyone who can spell Z-i-l-l-o-w but instead to a select, targeted pool of potential buyers. Beginning Jan. 1, pocket listings will be verboten. Agents caught using them will be fined.
This seems like a great idea. Pocket listings, detractors argue, compromise agents’ fiduciary duty to their clients, ignoring oceans of potential buyers in favor of a targeted few. Pocket listings also sidestep potentially revealing data like days on the market (DOM) and recorded price changes, withholding information most buyers would find helpful — and most market analysts would find important. If a pocket listing sits on the market for six months and undergoes six price reductions but nobody records it, does it make a sound?
Why even have pocket listings, then? Are they just more kindling added to a local market already well ablaze? Another way for exclusive Realtors to separate their listings from the pack, marketed to a select few through sites like thepls.com and networks like Top Agent Network (TAN)? “I really shouldn’t be showing you this, it’s not available to the general public, but since you’re a special buyer…”
There’s also a small issue with double-agency, in which one Realtor acts as agent for both the seller and the buyer. It’s generally frowned-upon in the real estate world… and generally easier to pull off behind the semi-closed doors of a pocket listing. Surely these issues must have been at stake when behemoth broker Compass sent the NAR a “pre-litigation letter” back in October, using words like “monopoly” to argue against banning off-market listings.
Wait a minute; did someone say “monopoly?”
It’s not completely outrageous to suggest that circumventing the MLS is a reasonable challenge to a system many have argued is monopolistic. In 2018, the MLS was sued by a Michigan attorney who charged that, in restricting posting access to NAR members only, the MLS was violating federal antitrust laws. That suit, like many others dating back to 1966, was dismissed, but it doesn’t take more than 15 seconds of Googling to learn that MLS love is not overwhelming in the real estate world. Then again, for us consumers, it’s difficult to see how breaking up the MLS like Ma Bell would help, given that we get free unlimited access as it stands now.
There’s also an assumption that pocket listings are a way for agents to prey on sellers, which is likely true in some cases, but there are legitimate reasons to list your property on the (semi) down-low, especially if you’re a celebrity or business titan of renown. That’s why pocket listings were invented, to keep, say, the Tiburon home of the late Robin Williams off of Redfin and Socketsite, away from people’s snarky comments and free from an open house featuring 5,000 Robin William fans, none of whom are qualified buyers.
Even for the non-famous, selling your home can be a disruptive circus. Listing off-market can reduce the number of lion tamers and jugglers, separate the browsers from the buyers and perhaps remove some stress for sellers who, studies have shown, are often already undergoing periods of life stress (divorce, relocation, death of a parent).
There are arguments on both sides. Is this a case of a benevolent organization protecting consumers by shaking out its bad actors? Or is it an example of a behemoth professional organization fighting off the latest challenge to its power? All we know right now is that pocket listings, once the growing rage among San Francisco real estate, have likely joined the VCR as something whose entire life span was shorter than that of some people’s favorite pair of shoes.
Larry Rosen is a San Francisco-based writer, editor, podcaster and recovering former Realtor. He is a guest columnist and his viewpoint is not necessarily that of the Examiner.