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Saturday, February 16 , 2019, 1:59 pm | Fair 60º

 
 
 

Laurel Abbott: ‘Pocket Listings’ a Risky Practice in Today’s Real Estate Market

The Multiple Listing Service has been around since the late 1800s as a tool for brokers to use to share listing information and provide compensation terms on sale opportunities to all local participants. “Pocket listings” are homes available for sale outside of the MLS. In this situation, an agent and an owner have made an agreement to sell the house while the property is only marketed by the individual agent’s efforts, thus keeping it in their “pocket.”

There has been an ethical debate about this practice for years. In fact, New York has regulations against the practice, and an agent can be in violation of our local MLS rules if they don’t follow the proper disclosure procedure.

Many feel that it is not in the seller’s best interest to limit the buyer pool. It skews statistics, and is unfair to other qualified buyers who were never shown the property.

On the other side of the coin, it can be a helpful practice if there are privacy concerns, if a seller is testing the market, if there are difficult tenants in residence or other reasons for a need to control the exposure.

Given the lack of inventory currently and the unpredictable outcome of marketing a property in this transitional time, it’s a risky practice. There’s no “testing the waters” right now; the market is moving at a remarkable pace, and with such a dramatic upward trend, it is clearly in a seller’s best interest to expose the property to all buyers and market the property fully before choosing a buyer.

An off-MLS listing may not be the most effective way to achieve the seller’s interest to procure the highest and best offer. This may be a breach of the broker’s fiduciary duty to that seller. If the listing agent fully discloses the possible consequences of not utilizing the MLS, a seller can opt out and a listing agent can procure informed consent by signing a form issued by CAR called a Seller Instruction to Exclude Listing from the MLS or Internet.

This practice should only be utilized in the most unique of circumstances. Contact a local Realtor to set up your action plan for sale, including a comprehensive marketing plan that utilizes our robust MLS system.

Laurel Abbott is a real estate agent with Prudential California Realty and president of the Santa Barbara Association of Realtors. Contact her at .(JavaScript must be enabled to view this email address) or 805.879.8050. The opinions expressed are her own.

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