POCKET LISTING

Slang term used in the real estate business. An agent lists a property for sale and does not enter it into the MLS system for several days, keeping it in his "pocket" so other agents will not know the property is for sale. This allows him to show the listing to his customers without competition from other buyers. The seller is unaware that the property is not being offered to ALL buyers and may accept a lower offer than they would have gotten if the property had been exposed to ALL buyers. This can be avoided by specifying that the Listing Agent provide you the MLS identification number within 24 hours of listing the property.

Pocket Listings Could Sell For Less
by M. Anthony Carr – Realty Times April 7, 2006

A property came on the market in my neighborhood the other day with a unique rider: "For Sale Soon." At first, I thought that was a unique marketing spin. The Realtor seemed to be on the ball and was able to get a sign in the yard before the property was really ready for showing. It's actually not a bad ploy -- it adds excitement, draws the neighbors' interest and gets the public ready to view the property once it's available.

However, almost two days later, the rider was replaced with a second rider stating: "Under Contract." I immediately suspected this was a pocket listing and the initial rider seemed to be a delay tactic to ensure the agent would receive payment from both sides of the transaction. My suspicions could be misguided. Maybe another agent saw the sign and called the listing agent with a buyer who wanted to purchase immediately without allowing a full market showing. It smacked of a "pocket listing," and there are several reasons why a homeowner shouldn't look to a pocket listing when he or she wants to sell a house.

A pocket listing is a property that doesn't come onto the Realtor-funded multiple listing system until it's already sold -- a practice that's rarely defendable. In fact, it's looked down upon so much that your local MLS may have rules against it. Metropolitan Regional Information Systems, Inc., one of the largest MLS in the country, serves nearly 50,000 Realtors in the Mid-Atlantic region. Its rules include:

Agents who fail to enter listings into MRIS as Active status and/or fail to allow property to be shown within 48 hours will be assessed a "Delinquent Entry / Inaccessible Property" fine of $500 for the first offense and $1,000 for subsequent offenses.

As far as Realtor-imposed fines go, that's a pretty serious fine and is one that doesn't go unnoticed. Realtors pay millions of dollars per year to maintain a cooperative MLS -- violate those rules and you'll be reprimanded and/or fined. Keep doing it and you'll be disciplined and ousted (well, at least suspended) which can nearly put an agent out of business.

Nevertheless, some agents like to bend the rules and will take a listing on Friday -- give the seller the weekend to clean up and get in the final touches -- then start hitting the streets for their own buyer before they place the listing in the system within the 48 hours (business day hours, mind you). Thus they've been able to market the property for four days without bringing in the competition.

The pocket listing rarely benefits the seller -- at least not an informed seller.

• It fails to provide the full market to the seller's disposal to receive the best possible price, meaning the largest bottom line.
• Pocket listings rarely create multiple contract offers.
• Pocket listings close out true competition for the property through open bidding.