OC pocket listing violations decrease

While the Multiple Listing Service is cracking down on off-market home sales, the number of pocket listings has decreased in recent months as demand slows and inventory climbs. We opine pocket listings have peaked.

The move targets “pocket listings,” in which real estate agents quietly market properties to a select group of brokers before listing the homes on the MLS, a database of properties for sale. Many times, brokers don’t enter the homes on the MLS until the property is sold.

They are not illegal if the listing agent fully discloses the pros and cons to the home seller and follows rules that are designed to protect consumers. To keep a listing off the MLS, a listing agent who is a participant of an MLS is required, under the rules of most California MLSs, to obtain a signed certification from the seller that he or she does not wish to sell the property via the MLS.

Pocket listings are most often seen at the top of the market. They have become more common at lower price points as the inventory of homes on the market declines. Fewer homes to buy has increased the incentive for real estate brokerage firms to reward favored prospective buyers with a look at a so-called “exclusive listing.”

However, pocket listings without a seller’s consent violate Realtor rules. The MLS is premised on the free-market belief that offering a home to a large number of prospective buyers is the best way to establish fair pricing, much like a stock exchange. By limiting the market, some prospective buyers are cut out of opportunities they would otherwise snap up.

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