Study finds pocket listings accounting for 1 in 4 sales in some Northern California markets.
The California Association of Realtors has published a “Q-and-A” on pocket listings for Realtors to distribute to their clients and the news media titled “The Pros and Cons of Off-MLS Listings: What Consumers and Real Estate Agents Should Know.”
The Q-and-A is heavy on the cons, and light on the pros. While “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,” pocket listings “may not be in the best interest of the property owner — particularly if a client does not know about the benefits of marketing his or her property through the MLS,” CAR warns.
A trimmed-down version of the Q-and-A submitted for publication in the San Jose Mercury News by the Silicon Valley Association of Realtors is simply titled “Realtors share info on off-MLS listings.”
The piece begins a preface noting that SVAR “would like home sellers to be aware that the practice of off-MLS listings can adversely affect their goal of getting the best price reasonably possible for their homes, especially at a time when inventory is at an all-time low.”
Pocket listings may also represent a threat to the Realtor association-MLS system.
A recent study by MLSListings Inc. found that pocket listings as a percentage of total home sales in some Northern California markets increased from 15 percent in 2012 to 26 percent during the first quarter of 2013.
Speaking in May at the National Association of Realtors’ midyear meeting in Washington, D.C., MLSListings Chairman Robert Bailey reportedly said he’s worried about the effects pocket listings could have on the industry.
“Could it lead to the collapse of our MLS model as we know it today?” Bailey said, according to a report by NAR’s “Speaking of Real Estate” blog. “Could it lead to the erosion of an agent’s value? There’s not a market that’s exempt from this issue.”
Inman News columnist Teresa Boardman — a St. Paul, Minn.-based broker —has written that because inventory shortages have agents beating the bushes for sellers, there may be more opportunities to do off-MLS transactions. Those off-MLS transactions aren’t necessarily a bad deal for sellers, who may be able to negotiate a reduced commission.
“There will always be pocket listings and for-sale-by-owners and private sales,” Boardman notes. “Are we really serving consumers by closing every loophole that could keep a home off the MLS, or are we just serving the interests of our MLSs and various third-party websites?”