By Mark Blazek, President
Greater Chattanooga Association of REALTORS®
The Greater Chattanooga market is not unlike many across the country in that lately we are seeing more “coming soon” yard signs and often hearing references to “pocket listings.” What do these terms actually mean?
“Coming soon” signs and advertising are used to market a property that is not yet ready for the market. “Pocket listings” refer to executed listing agreements in which the seller has agreed in writing that the property be withheld from the Multiple Listing Service (MLS). Pocket listings also are known as “off-MLS” listings.
There are legitimate reasons that a seller may want to begin marketing a property prior to it being ready for showings. And in a few special circumstances it might be in the best interest of the seller for their property not to be included in the MLS. However, we often hear complaints about the listing agent who holds back on making properties available for showing. The seller is not ready for showings. Let me call you back when we’re ready. Delay tactics – you’ve heard them all when it comes to seeing a sign in a yard or hearing a property is on the marketing but potential buyers being unable to find the listing.
While there may be no proof of unethical conduct, selling agents speculate that the listing agent is delaying in hopes that one of his own buyers, or an unrepresented buyer, will have an interest in the property. The listing agent might even suggest to the seller that having only one agent involved would make the transaction go more smoothly. In such a scenario, a listing agent allegedly welcomes inquiries from consumers but avoids showings and/or withholds property information from some or all potential selling agents.
Specifically related to pocket listings, the listing agent might share the property information with a select group of fellow agents, who work a certain demographic and/or who agree in exchange to share information about their own pocket listings. Next week, we will continue with this same topic and discuss ways in which off-MLS listings are potential violations of the antitrust, fair housing and licensing laws, as well as how off-MLS listings skew local market data, which adversely affects all sellers and buyers.
In light of such suspect activity, REALTORS® are reminded of the Code of Ethics Article 1, which requires REALTORS® “to protect and promote the interests of their client” and to “treat all parties honestly.” Additionally, Article 3, Standard of Practice 3-8 requires that “REALTORS® shall not misrepresent the availability of access to show or inspect a listed property.” Thus, listing agents should let the seller’s interests, not their own, determine an honest and appropriate response to such inquiries.
MLS subscribers must be responsible and ethical real estate practitioners, as well as cooperative competitors, sharing in the spirit of fellowship and camaraderie that is necessary to achieve singular success. Not only is the MLS a means by which participants make blanket unilateral offers of compensation, but also a shared database of property information, including availability for showings.
A few other states already have seen lawsuits related to the above-described scenarios. In some cases, it was at the listing agent’s suggestion (not the seller’s request), that the listing was withheld from the MLS. After closing, the seller learned of potential buyers who would have paid a higher price for the property. From these cases, it is clear that restricting the pool of eligible buyers very likely results in the seller not getting the highest possible sale price.
It is difficult to imagine a more effective strategy for maximizing market exposure than 1) submitting a listing to MLS no later the MLS required 48 hours and 2) welcoming the immediate calls from your fellow REALTORS®. Advise sellers of the value of 1450 MLS subscribers who are probably working with the prospective buyers of their property and make their properties available now, not later.