Reader comment: I’ve been following your discussion
of pocket listings with interest. I had an unfortunate experience with a broker
who used a pocket listing to try to sell my father’s home. The broker blatantly
used the pocket listing to discriminate and market the property only to members
of the religious community dominating the area.
A house of worship was built near my father’s home, and
members of that house of worship are now the primary buyers of homes in that
neighborhood. I made sure that the broker we hired had experience in selling to
that community, but the broker didn’t tell me that he didn’t sell to anyone
outside that community.
We listed the home with him and at his request allowed him
to keep the listing as a pocket listing for a short period. After several
months with only one showing, we directed him to put the home on the multiple
listing service (MLS). He resisted and insisted that the home only be sold to a
member of that house of worship.
When I insisted, he placed the home on the MLS but described
the house so that only members of that house of worship community would want to
see the house; the only description of the property in the MLS related to the
distance to shopping and the houses of worship in the area. The listing didn’t
mention any of the usual descriptive items for homes and only showed one photo
of the home from years ago that did not show current improvements.
When I saw the MLS listing, I immediately told the broker
that the listing was in violation of state and federal law. I insisted that he
remove the listing from the MLS and fired him the next day. We filed a
complaint against the broker with the state agency that regulates real estate
brokers. We relisted the house with another broker and within a month had a
full price, all cash offer and closed a month later.
Interestingly, of the potential purchasers that the new
broker brought in, none were members of that community. I assume that we were
blacklisted for trying to sell outside the community and filing the complaint.
I have no idea who the purchasers were other than that they were not members of
that community. I thought your readers would benefit from hearing about our
experience.
Our response: Thank you for sharing your story. Over
the past year, we have written several articles on pocket listings and the
potential damage they can cause buyers and sellers.
A pocket listing refers to a situation where a home seller
hires a real estate agent to sell a home, but the agent holds off on listing
the home and instead markets the home privately to potential buyers, some of
whom the agent may represent directly. The agent does not make use of the MLS
and the home does not show up on any of the online listing sites, including
Zillow or Trulia.
Last year, the National Association of Realtors (NAR) came
out with a policy that prohibited the use of pocket listings. The policy is
called the MLS Clear Cooperation Policy and requires Realtors to place the
property on their local MLS and share that listing with other multi-brokerage
networks within one business day of marketing a property to the public.
While the NAR debated the proposal, it emerged there were
quite a number of Realtors who opposed banning the practice of pocket listings.
In the end, the NAR passed the rule with some opposition.
The NAR has a page on its website describing the MLS Clear
Cooperation Policy. The policy does permit certain exclusions from the policy
but makes it clear that once the property is publicly marketed, the property
must then go into the various services as a whole.
The issue with any policy like this one is its
implementation and how some Realtors may decide to follow the rule. You clearly
had an experience where a real estate agent was abusing the pocket listing, and
your father suffered by having to wait until you changed agents (and brokerage
companies) to receive a full-price offer for his property.
You were right that the way the agent implemented the pocket
listing violated the law. The Fair Housing Act prohibits discrimination against
people in the renting or buying of a home, getting a mortgage, seeking housing
assistance or engaging in other housing-related activities.
Your father’s agent appears to have attempted to sell your
home to a specific group of people at the exclusion of others. That was wrong.
Then, your father’s agent tried to influence your father’s ability to sell the
home in the marketplace by attempting to keep you from using the MLS, in clear
violation of NAR’s Clear Cooperation Policy. Finally, the agent worked against
your father’s best interests in listing the home in such a way as to keep
potential buyers from seeing your home and discouraging buyers from buying your
home, a violation of other NAR ethics rules.
All in all, your father’s experience was about the worst we
have heard in a while. We’re so sorry that’s how it turned out, but we think
you were right to report the agent.
As home sales heated up this summer in suburban
neighborhoods across the United States, we saw a resurgence of pocket listings.
How do you know? “Coming soon” signs that stay up for weeks on end without the
properties ever being officially listed are good indicators that something is
wrong. Agents may mistakenly believe they are just giving their own buyers
first dibs, but their managing brokers need to stay on top of what’s happening
in their firm and teach agents how to grow their business without running afoul
of the law or NAR’s rules and regulations.
Click
here for the original article.