When you decide to sell your home and engage an agent, one of the first things your agent will do is list your home on the Multiple Listing Service (MLS). The MLS is a database of homes for sale where agents share property information with each other. These listings are widely shared to real estate search sites like Redfin.com, where buyers can see homes available for sale.
But what if you don’t want your listing published on the MLS? In this case, you may decide to sell your home as a pocket listing.
So what is a pocket listing? Let’s take a closer look at how pocket listings work, their pros and cons for buyers and sellers, and the recent debate surrounding Clear Collaboration.
What is a pocket list?
Pocket listings (also known as “whisper listings” or “office exclusives”) are properties for sale that are not listed on the MLS. Instead, agents keep the listings “in their pocket” and provide them privately to selected buyers or agents in their network. These listings are considered “off-market” and are not sold to the public.
This method can provide privacy for sellers, but limits their exposure to potential buyers, among other drawbacks.
The National Association of Realtors (NAR) discourages pocket listings under the Clear Cooperation Policy (CCP), which applies to all NAR-owned MLSs. Most MLSs also require that the broker submit the listing to the MLS promptly after the seller signs the listing agreement. However, pocket listings may be permitted in some cases.
How Pocket List works
When a seller hires a real estate agent to list and sell their property, they typically sign a contract, called a sales contract, that obligates them to cooperate. The agent then lists the property on the MLS and begins marketing it. Per NAR’s clear cooperation policy, agents are required to list a client’s property within one business day of publicly marketing it. This is to facilitate cooperation between sellers and their agents and buyers and their agents.
However, with pocket listings, the agent keeps the property off the MLS and does not market it publicly, limiting exposure to buyers within the agent and seller’s network. This approach bypasses the broader market and is usually limited to specific cases, such as divorce or death in the family. The ultra-wealthy and famous may also choose pocket listings to maintain privacy and exclusivity.
Advantages and disadvantages of pocket listings for buyers and sellers
Here are some important pros and cons to keep in mind about pocket listings.
Strong Points:
Selected buyers will have access to exclusive properties, giving them a competitive advantage. This can be attractive for high-profile or high-end properties because sellers maintain strict privacy and control who can view their home. There will be fewer people walking through the seller’s home, minimizing disruption to your schedule.
Cons:
Buyers miss out on access to a broader market, limiting their ability to compare properties and potentially creating inequities. Sellers are facing decreased visibility, which could lead to fewer offers and lower sales prices. Pocket listings undermine fair housing laws by restricting access, favoring the well-connected, and undermining trust in the real estate market.
Is pocket listing legal?
Although pocket listings are legal, agents affiliated with the MLS are subject to specific MLS rules and regulations. Sellers who want privacy in their sales can choose to list their home on the MLS so it can be viewed by other agents, but it won’t be syndicated to real estate websites (although all MLS does not allow this). Sellers can also instruct their agents to mark the listing as “office-only.” In this case, agents can only share listings with other agents from the same brokerage.
This means that agents and REALTORS® can still use Pocket Listings, but Clear Cooration cannot sell properties publicly (i.e., via social media, yard signs, or email) without adding them to the MLS. It stipulates that it is not possible. Sharing with other agents within your brokerage is permitted. As a result, large non-franchise brokers tend to benefit because they can share with a broader agent network.
Pocket listings are more common in competitive markets and in luxury properties where discretion is important. This is because sellers can control who views their home, reducing public foot traffic and speculative buyers. However, research shows that limited exposure can limit the pool of potential buyers, which impacts sales prices and schedules.
The National Association of Realtors severely restricted pocket listings in late 2019 as part of a clear collaborative policy aimed at promoting fair housing, improving data quality, and increasing collaboration. Notably, the policy still allows private private listings (pocket listings) under certain circumstances, such as if the seller requests confidentiality.
What is explicit cooperation in real estate?
Explicit Cooperation is a policy established by NAR in 2019 to limit the use of pocket listings and promote equal access to housing.
Clear Collaboration requires real estate agents to submit property listings to the MLS within one business day of publicly selling a property. This ensures that all buyers, regardless of their connections, have equal access to available properties, promoting fairness and transparency in the housing market. By restricting pocket listings, this policy is intended to prevent exclusionary practices that can limit access to certain properties and ultimately undermine fair housing.
The policy aims to create a more open and cooperative market, but has faced criticism that it limits sellers’ options and may not necessarily benefit them. Violation of explicit cooperation will result in severe fines and penalties. Now, in the wake of the industry-changing fee settlement, there are new efforts to reverse it.
Pocket List Controversy
Pocket listings have recently become more popular, but have been growing slowly for more than a decade, especially in hot markets. The industry took notice, and NAR effectively banned this practice in 2019 through a clear cooperation policy.
But in the wake of NAR’s industry-wide settlement and subsequent rule changes effective in late August, Clear Coopation’s opponents are questioning this. Some say this is anti-competitive, but others say it’s an even worse deal for home sellers and violates agents’ fiduciary duty to act in the best interests of their customers. Some opponents say their campaign is to save the industry from another antitrust lawsuit, one of which is currently being heard in court.
Redfin supports clear cooperation
At Redfin, we believe that positive collaboration is the foundation of a fair, supportive and equitable housing market where everyone can find the home of their dreams. We believe the termination of Clearoperative will only benefit big brokers and be detrimental to consumers, agents, and fair housing. This is just another way to devalue MLS and empower the big players who can stockpile inventory.
In an editorial, Redfin CEO Glenn Kelman said: “If the clear cooperation policy is reversed, agents will have to work with larger brokerages to ensure their clients can access their services, even if it means accepting a lower commission split. You may feel pressured to join the list of all available. When a single company dominates a market, smaller brokerages have a hard time competing. ”
At worst, ending clear collaboration could send us back to an exclusive past. Research shows that buyers most likely to lose access to pocket listings are buyers of color, violating important principles of fair housing. This is a key reason Redfin supported the passage of Clear Coordination in 2019, when pocket listings were on the rise.
Explicit cooperation is not sealed and has some notable loopholes. Agents from the same brokerage can share private listings with each other while not providing private listings to other brokerages. But a policy with loopholes is much better than no policy at all.
Other supporters of Clear Commission include industry leaders eXp Realty and Zillow. They agree that ending Clear Collaboration would be terrible for consumers and agents and could undermine public trust in the real estate profession.
Pocket List: What’s next?
Pocket listings have been a part of the real estate industry for decades, but have recently gained traction. Although these can offer privacy and exclusivity, they also raise concerns about fairness, transparency, and limited market access.
Although Clear Collaboration attempts to balance these concerns, the future of pocket listings remains a topic of debate within the industry.
Redfin has long supported open marketplaces and continues to advocate for greater transparency, better deals, and equal access to listings for consumers. We believe that fair housing is the cornerstone of a prosperous and just society, and that the end of Clear Coopation threatens these ideals.
