Are Pocket Listings Unethical?

As the housing market continues to rebound (slowly but surely), “pocket listings” are have become questionable part of the real estate process. Brokers and sellers always like some privacy, but to what extent does it become unethical?

A pocket listing is a situation in which real estate agents peep sales information about a home off the multiple listing services (MLS) and brokers only show that house to individuals who they expect to actually buy the property.

The National Association of REALTORS doesn’t have specific rulings on pocket listings, but it’s an unwritten rule it isn’t a fair practice. However, in New York “pocket listing” does indeed violate the Universal Co-Brokerage Agreement, which requires agents to share listings.

Some would claim that a gray area is created with pocket listings. The idea is that agents can collect double commission from the deal by being agent for the buyer and seller. If the agent is putting their own personal interest ahead of his clients, then that does in fact violate the law, as well as business ethics.

Some agents will advise their clients to lower the price of their home when the “pocket listing” doesn’t sell quickly. They also let me know about putting their home up on a public MLS site. Some agents also think a few sellers may like the privacy of pocket listings because they aren’t too eager to move, that is unless a “make me move” deal is made with an incredible price.

Use your own judgement when it comes to pocking listings. If you think what you're doing is shady, it probably is. If there is no harm in what you're doing to any party involved, by all means have yourself a good ol' pocket listing.

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