Selling homes via pocket listings skyrocketed during the pandemic. This upswing hasn’t abated throughout 2021 despite NAR prohibiting its 1.5M members to use this practice.
Pocket Listings Still Big Presence in Market
Pocket listings, the practice of brokers/agents selling properties via their private networks instead of selling property listings on public or open markets, took off during pandemic-2020. Redfin estimated that during the pandemic, agents/brokers increased using pocket listings to sell properties by 67%.
Today, some analytics experts estimate that 20% of all listings in the nation’s hottest markets (markets with the tightest inventories) are only available via pocket listings despite the National Association of REALTORS® (NAR) prohibiting its 1.5M members (75% of all real estate agents) to use pocket listings in 2019.
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How Can Agents/Brokers Continue Using Pocket Listings When Practice Prohibited?
The simple answer is…loopholes.
Even though NAR requires its members to publish all their properties on its MLS site within 24 hours of contracting with their sellers so property listings can be publicly marketed to anyone (consumer and/or real estate professional), NAR does not enforce its own policy.
NAR leaves it to local broker organizations/associations to enforce this policy of banning pocket listings. In other words, NAR leaves the reporting and the enforcing of this NO POCKET LISTINGS policy up to agents and brokers to police their own.
Even with this prohibition against pocket listings, NAR allows agents/brokers to market their pocket listings among their buddy agents/brokers within their own brokerage firm. On top of that, NAR allows agents/brokers to market their pocket listings as properties that are “coming soon.”
There are agents/brokers out there who’ve found their own ways to get around this NAR policy of banning pocket listings. According to Matt Lavinder, president of New Again Houses, a home flipping company, brokers/agents use WhatsApp, Discord and Telegram chats to privately share their pocket listings with their buddies/private networks/friends.
Pocket Listings All About Having Access to Insider Knowledge
According to Andrew M. Lieb, a real estate attorney and founder of the Lieb School, a licensed New York State real estate school, any enforcement against pocket listings will always be “feeble” as long as the duty of enforcing this policy is on agents/brokers to police their colleagues and each other.
Lieb believes that the pandemic-2020 spike in pocket listings or “closed-circuit real estate transactions” could have long-term, generational effects. Lieb said, “A pocket listing is only going to allow people that are in the in-crowd to be living there. And you have to look that way and talk that way to get there.”
Then there’s the whole question of whether or not pocket listings violate fair housing laws and standards…we’ll take up that question in another post.
Thanks to The New York Times.
