I have to say, it amazes me, what I am seeing. A pocket listing is where real estate agents intentionally take actions that prevent a home from being marketed by other agents. The typical strategy is to not place it on the MLS.
Who would stand for their home not being in the MLS? Where the answer seems to be nobody would stand for that, I have seen two types of sellers who fall for that strategy: 1- the old and not sharp anymore 2- those who think the agent is a nice guy and trust him. After all the nice guy agent is cool, especially if he sells the home. Actually, it's not so cool. I am at this time trying to intercept such as situation. The owner is 97 years old and about to go into assisted living. The nice guy agent is trying to get her to sign paperwork giving him the right to sell her condo for $220,000.00. He has a buyer. That sounds great, a buyer so fast. Not so great - the home is worth $250,000. So in this case the agent gets both ends of the commission, the home never hits the multiple giving other agents buyers a chance to bid the price to its real value.
Sadly there are two condo developments in our community that have agents living in the buildings that have this kind of control. They get away without having sanctions by our MLS because they don't belong to the MLS.
I actually consider this behavior to be criminal, nice guys or not. What is the difference in embezzling $30,000 and intentionally under pricing, or leaving it out of the MLS to get a quick sale. The answer should be, there is no difference.
There is another way, and I have seen two of these quite recently. One knows I am competing against him and is now on occasion slipping the listing to an MLS broker he is related to. The other, the seller is living in New Mexico and was unaware of what was happening. What these two blokes have done is to not place a lock box for other agents to access and show the home. In instance one, the listing relative is the point of contact and then he says to call the non MLS agent who must accompany anyone who wants to see the home. The homes are empty. They are listed in the MLS as by appointment only. THIS IS IN FACT THE SAME AS A POCKET LISTING, as it in reality prevents other agents from bothering to show this one. That is the strategy, no one else is to show it.
You should have seen the stunned look on the folks from New Mexico. They hadn't lived in their home for the past two years. They called me and said they were on the way to Salt Lake and wanted to meet me to discuss listing their home. I met them at their insistence. I was hesitant as their was some confusion if the listing had expired. They said that they were on the way and only were coming to see me. So I met them. It went fine. They loved how I would market the home. I wanted my staging expert to see the home while they would be gone to determine a few things. So, I asked them was their a key in the lock box? Their face showed stunned. They hadn't seen a lock box. It turns out there is no lock box. This home has been on the market for over 9 months. The listing says by appointment only, listing broker to be there. WHY? THE HOME IS VACANT? The home is on a busy street. The agent has a gigantic sign out front to contact him. The total lack of activity has caused the price to be driven down by $95,000, way below market value. He wants to sell the home, but he has it so only he can sell the home. Yep, criminal.
This months REALTOR (r) magazine addresses the seriousness of pocket listings, which in all these cases I write of here, are in reality pocket listings. The most common way this is done is to just delay putting the listing in the MLS, to persuade the seller it isn't the thing to do, or to just ignore the rules and omit doing it.
It is a serious activity.This months article to agents makes the points "withholding a a listing from the MLS, depending on how the situation is handled, can be a violation of his/her higher fiduciary duties, including loyalty, or placing the interests of the client above the interests of the agent..... An unsatisfied seller could allege that a broker breached his duties as the broker did not seek to obtain the highest possible price for his client where the client didn't understand that the marketing of the property might achieve the highest price."
The bigger question that comes to my mind is if they will do this for money what else will they do?