In California, pocket listing controversy between agents and sellers is reaching the point of litigation, and back in May, a joint meeting of the Multiple Listing Service Forum and Multiple Listing Issues and Policies Committee was held to specifically discuss the significant rise in pocket listings, or listings that are not listed on the MLS. In a study comparing public records with MLS listings in the California communities of Monterey, San Benito, San Mateo, Santa Clara and Santa Cruz, it was reported that off-MLS listings increased from 15 percent in 2012 to 26 percent of the market in the first quarter of 2013.
The trouble with pocket listings? It is the fiduciary responsibility of the agent to show the property to as many people as possible to get the seller the best price for their home. The only way to effectively do this today is by listing the home on the MLS.
“In reality, if it’s priced right and you put it on the MLS, you’ll get multiple offers and in most cases, get more money for your seller than a pocket listing would,” Fama says. “You do not know what a home is really worth until you expose it to the marketplace.”
In addition, there is a very clear listing agreement the Texas Association of Realtors (TAR) abides by, and the language is very clear – do what’s best for your client. Frank says that according to paragraph 6B in the listing agreement, unless the agent needs time to do prelisting tasks – declutter, stage the home and take high quality photos, for example – and alerts the seller, the listing should go up on the MLS as soon as possible. There is also a box on the listing agreement that says the listing agent can’t even suggest not putting the listing on the MLS.
“A seller would have to tell me, ‘I think we need 10 days to do pre-listing tasks before putting the listing on the MLS,’ and I’d have to write that out in the agreement,” Frank says. “That is the only way I could have a listing not on the MLS, because the agreement is very clear.”
And while pocket listings aren’t obsolete, they are heavily looked down upon by a vast majority of agents. They are “almost unethical,” in Frank’s words, because it seems an agent isn’t trying to get the best deal for the seller, but for the agent him or herself. But, while rules regarding listings and the MLS are clearly spelled out by TAR’s forms, agents don’t have to use that form.
“For all intents and purposes, TAR’s form is used 95 percent of time,” Frank says. “That being said, there is nothing to stop an agent from having an attorney to draw up a new agreement and use that one.”