Pocket listings come and go as the market ebbs and flows between a buyers market and a sellers market. There are times when a pocket listing– a listing that is not listed into the MLS makes absolute sense for the seller, but there are times when it does not. Before taking on a pocket listing consider these risks.
The real estate or broker, not the seller, is the one pushing for an off-MLS listing. Make certain the decision is made voluntarily and solely by an informed seller. Have a signed listing agreement that spells out to clients the limitations of not listing the property in the MLS – such as it may reduce their chances of getting the highest and best price for their home by reducing exposure to the public.
“Coming Soon” marketing that limits the listing’s availability to a specific group of brokers during the pre-marketing period. If you market a property as coming soon be certain all agents, brokers and buyers have equal access to the listing. Better yet, do not let anyone in the door until it is listed in the MLS. A status of Coming Soon helps generate buzz, but opening the door during that Coming Soon time reduces that interest. People want what they cannot have – so make them wait until it is ready to go live on the market.
An agent fails to notify their member MLS when a client opts to keep the listing private. Most MLSs require that after a listing agreement is signed, the agent must file a certification – signed by the seller – noting the listing is not to be disseminated to other brokers using the MLS. Typically the notification must be filed with a few business days after taking the listing and having a signed listing agreement. Please note you may be fined if are in found of violation of a MLS rule.
An agent faces accusations of breaching fiduciary duty in order to earn double commission. Off-Market listings can lead to more dual agency or intermediary in Texas, as the agent may actively advertise the property only to his or her clients. While this is not illegal, the practice can be problematic if the prospect of a double commission is the reason the agent suggested an off-MLS listing. Agents risk of being sued by a buyer clients, for example, who might believe you didn’t seek the best price since you also represented the seller. It is strongly encouraged that each client have their own individual representation to limit risk.
Agents are accused of antitrust or fair housing violations by limiting listing exposure to a narrow buyer segment. Be sure you are fulfilling your duty to “cooperate with other brokers except with cooperation is not in the client’s best interest,” as stated in Article 3 of the Code of Ethics.
It is Urban Provision, REALTORS® policy to educate the seller of the risks of a property not listed in the MLS. Once they are educated of that risks and if they still want to proceed with an off-MLS listing, then the agent should follow MLS protocol to ensure no MLS violations occur.