Last month, a new rule went into effect limiting the use of pocket listings, after the National Association of Realtors voted to require agents who sell through Multiple Listing Services to submit their listings to the MLS within one business day of marketing the property to the public.
In a market struggling with a shortage of inventory, the rule was welcome news for consumers, according to Charles El-Moussa, president of Coldwell Banker Realty. “As a brokerage, we are committed to offering excellent service, all-around, to consumers, and ensure that their best interest is always upheld. It’s important for us as leaders in the industry to support and respect a policy that is intended to align with fair practices for all consumers,” El-Moussa said.
Many industry experts think pocket listings — also known as “whisper listings” or “off-MLS” properties — do not benefit clients on either end. Sellers end up getting short-changed because their homes aren’t exposed to the largest number of potential buyers, while buyers want to see all the options available on the market at any given time.
“Our industry has been built on the premise that we are here to assist buyers and sellers in purchasing and selling homes,” said Nancy Klock Corey, regional vice president of Coldwell Banker Residential Real Estate in southeast Florida. “We work hard to put these properties into the public arena in order to give buyers the opportunity to have the greatest selection of homes to choose from and to give sellers the largest available market in which to showcase what is normally their most valuable asset they own — their home. The new policy works to ensure an open and fair market in which to trade real estate, which is in the best interest of both buyers and sellers.”
The benefits that accrue to agents who sell off-MLS listings include reduced time and expense for marketing and the ability to retain the full commission if they can line up a buyer who isn’t already being represented. But some say the institutional force driving the practice was upstart real estate firms seeking to build a hidden treasure trove of homes.
State and local MLS and Realtor associations have until May 1 to make the necessary changes to comply with the new NAR rule, known as Clear Cooperation. But they also have some flexibility in terms of how they’re going to enforce the rule.
“There are numerous MLS providers in Florida, each with its own rules,” said Florida Realtors Vice President of Law and Policy and General Counsel Juana Watkins. “Implementation of Clear Cooperation 8.0 will ultimately fall under the authority of these providers. Florida Realtors continues to promote awareness of the new policy to its 195,000 Realtor members.”
The MIAMI Association of Realtors told Miami Agent magazine that it has convened an MLS workgroup and is in the process of updating its MLS policies and procedures to ensure compliance with the new rule, though they did not provide details of the implementation plan.
NAR and the Council of Multiple Listing Services maintain the measure was unavoidable, especially given that the real estate industry is currently under the Department of Justice’s microscope for possible antitrust issues.
“It was a necessary step,” said Denee Evans, CEO of the CMLS. “As an industry, if we don’t come together, that leaves us in a position for government intervention.”
While NAR believes the new rule addresses some of the major concerns that agents and brokers have, a side door remains open. “Office exclusives” and “coming soon” statuses still allow agents to market their listings within their own brokerages before appearing on the MLS, though organizations such as the MIAMI Association of Realtors must create rules to govern how it’s handled within their systems.
Mercedes Saewitz, sales manager at Compass Florida, characterized this compromise as a win-win. “Overall, the policy clarifies the MLS rules and regulations, and also paves the way for associations to create a ‘coming soon status’ that continues the beneficial practice of pre-marketing of listings, while extending the comfort of knowing what [the] offer of compensation is,” she said.
But some critics say that practice is likely to become just another way to secretly shop properties. “Allowing agents to privately market new home listings to other individual agents does not serve the interests of either the seller or buyer,” said Consumer Federation of America Senior Fellow Stephen Brobeck in a recent blog post. “Sellers may miss out on opportunities to sell for a higher price and buyers are limited in their selection of properties.”
Brobeck added that lack of available housing inventory has made the practice even more unfair, and called office exclusives, coming soon listings and other off-market designations anti-consumer in nature and a threat to fair housing rules. “Agents who pocket list are effectively gaming the system — restricting access to their listings but retaining access to the listings of other agents,” Brobeck wrote.
NAR’s official position regarding in-house listings and coming soon labels is that “one-to-one promotion” between brokers and their clients “is not considered to be public advertising.” How that will be handled is ultimately up to the discretion of the local MLSs.
One thing is clear: The pocket listing measure has touched a nerve throughout the industry. At a time when new technology systems are increasingly attempting to make the MLS – established in the 1800s – obsolete, the battle seems to be less about consumers and more about the control of real estate information. Who will ultimately win remains to be seen.
For now, Evans is confident the new rule is the right step towards ensuring that MLS databases are accurate and accessible. “This policy is about making sure all agents have access to all listings and are able to share them with their clients regardless if they know the ‘right agent’ or belong to the right groups,” Evans said. “This policy is about stomping out dark silos of information. This is our collective MLS moment that will definitely shape our future.”
One thing is clear: The pocket listing measure has touched a nerve throughout the industry. At a time when new technology systems threaten to make the MLS obsolete, the battle seems to be less about consumers and more about the control of real estate information.
“This policy is about making sure all agents have access to all listings and are able to share them with their clients regardless if they know the ‘right agent’ or belong to the right groups,” Evans said. “This policy is about stomping out dark silos of information. This is our collective MLS moment that will definitely shape our future.”