A seldom used term – “Pocket Listing” refers to the practice of a homeowner contracting the services of a Real Estate Brokerage to market their home – HOWEVER the LISTING BROKER convinces the Home Seller that their interests are BEST served by NOT entering the property for sale in the MLS (Multiple Listing Service) for a period of time or perhaps ever! Nationally, MLS’s – (Multiple Listing Services) are often recognized as the #1 reason most property values have risen – and thus it is used / encouraged and SOUGHT AFTER by MOST SELLERS wanting the BEST PRICE AND TERMS for their property. Today’s MLS’s are INCREDIBLY TECHNOLOGICALLY ADVANCED and have been developed to provide the MAXIMUM Exposure of ANY property by ANY Brokerage – thus equaling out the Playing field of Real Estate sales. Small Brokers can compete almost nose to nose with Major Franchise Brokerage firms while providing invaluable marketing tools to ALL clients, Sellers AND Buyers alike.
Now in a day and time when Home Buyers are using every bit of available “STATE OF THE ART” technology to aggressively look for homes to purchase in select areas – just who really benefits from this practice? In the MAJORITY of instances – the LISTING Real Estate Broker is the #1 Benefactor of this process - and for MANY reasons. Why is that you may ask? Let’s reflect on just one of the following reasons…
The #1) reason Brokers encourage this process is simply –BECAUSE ALL OTHER BROKERS – ACTIVELY WORKING WITH READY / WILLING / QUALIFIED BUYERS, ARE LEGALLY EXCLUDED FROM IMMEDIATE MLS ACCESS TO THE PROPERTY INFORMATION, (and possibly even having a chance to make a bid on the property – BEFORE it sells to another Buyer.) Thus the Buyer who does NOT have a relationship with or is unable to successfully reach the Listing Broker – may be eliminated from even making an offer simply by an inability of reaching the LISTING BROKER - LIVE or in a timely manner. YES - oftentimes the Listing Agent’s phone number is the ONLY number on the sign too. If that BROKER doesn’t feel like calling you back-then you are S.O.L. – maybe in an attempt to give their preferred Buyer the BEST chance to buy it.
Another possibility exists - the Broker with whom the Buyer may be under contract to work with – is UNABLE to easily access the Homes information in order to prepare a timely offer – again – penalizing the Buyer from presenting or the Seller from entertaining the Highest & Best offer/s. Some may also see this as a form of segregation – keeping “OUTSIDER” Buyer candidates - looking to move into the area - from receiving the information in the established practice of publishing this information through the MLS Search formats. That’s unfair – wouldn’t you agree? Maybe you would if you/your family were these unfortunate Buyer/s who didn’t / couldn’t receive the timely information as other Buyers connecting with or having a relationship with the Listing Broker -did. You might be upset. I BELIEVE THAT YOU SHOULD BE UPSET! I’m a Broker who does NOT participate in such policies and it definitely UPSETS ME too!
Couldn’t this also be considered UNDISCLOSED DUAL AGENCY? It may not be Officially – B U T – you tell me…
This now opens the door to the term/process of UNDISCLOSED Dual Agency – generally discouraged or outlawed by other States – yet allowed in the State of Illinois. Attorneys in ILLINOIS CANNOT perform DUAL AGENCY – however Real Estate Brokers in Illinois can. How does referring a Buyer to another Broker –in your very own Team/Office, who will pay you a REFERRAL FEE upon a successful purchase of this property – the property owned by the Seller whose interests YOU are contracted to oversee/ guide/giving counsel to -protect their interests? When YOU figure it out – Let me know!
THUS – the LISTING BROKER MAY BECOME THE LISTING AND SELLING AGENT of the property – or a recipient of a REFERRAL FEE from another agent within their “TEAM” or company - they gave the Buyer lead to. How does this serve the BEST INTERESTS of the Seller? In this AGENTS OPINION – IT DOESN’T – Just a bunch of Smoke and Mirrors.
Now let me clarify that “I” for one am NOT opposed to AGREED UPON DISCLOSED DUAL AGENCY – however the manner some Local & Major National Brand name BROKERAGES are encouraging their Brokers to suggest & encourage their unwitting Sellers to agree to such a process – in MY Opinion is wrong, treating both SELLERS AND BUYERS unfairly in an attempt to gain unfair market dominance/more money and more exclusivity with Buyers. It may even encourage alienation of a Buyer under contract with another Brokerage - to break or attempt to cancel their contractual agreements to one another so that they too may gain an edge over other Buyers as their agent is crippled by lack of information accessibility.
In a time when everyone is trying to get the very most for their properties, WHY WOULD INTELLIGENT SELLERS AGREE TO SUCH SEEMING INSANITY? Because someone has convinced them they will benefit more from the process. Now who would encourage such an idea? For one - the LISTING BROKER AND THE BROKERAGE FIRM WHO ENCOURAGES SUCH ACTIONS OF COURSE! And what possible LEGITIMATE excuse/reason is given to get inexperienced /unknowing Sellers to participate in such a ridiculous action? YOU TELL ME – BECAUSE “I” FOR ONE CANNOT POSSIBLY SEE HOW ANY SELLER / BUYER / OR EVEN THE COMMUNITY A HOME IS LOCATED IN CAN BENEFIT FROM SUCH A SELF-SERVING ACTION/PROCESS. Personally - I believe that this is also a CONFLICT of INTERESTS AND ETHICS. Yet we are seeing it happen more & more in today’s market.
There may be possible arguments that can be made to support such actions - but to me – a 31 year veteran in the Real Estate Industry – I don’t get how it helps out anyone but the BROKER/the BROKERAGE COMPANY & in minutely Select situations – a Seller. BUYERS not connected are screwed!
BE AWARE -at least ONE National Franchise Brokerage STRONGLY ENCOURAGES its Brokers as part of their policy to regularly perform such practices – claiming it a benefit to the Sellers from one side of their mouths while telling their agents (and in an attempt to recruit other Brokers to join them), that it provides BUYER exclusivity and Market Dominance. So what is it?
I will be forwarding this article to our Realtor Leadership because I think it is a program/process/ procedure that should be GREATLY discouraged in our EXTREMELY PROFESSIONAL Industry. At one point – Brokerage Companies were encouraged by Realtor Leadership/Legal Counsel to have these Sellers sign a form claiming they “understand the value of the MLS” & yet still be willing to exclude their property from the MLS. Believe me – if Sellers truly knew the incredible value they LOSE by keeping their homes out of the MLS, trusting the EXCLUSIVE HANDS of a lone Broker/Brokerage - while expecting the best representation – NO INTELLIGENT SELLER WOULD PROBABLY EVER AGREE – I WOULDN’T! WOULD YOU?