Agent Katie Hayes answers a prospective homebuyer’s questions during an open house in California. So-called non-MLS listings of properties for sale, which exist off the books, have become a hot topic where housing stock has become scarce. (Justin Sullivan, Getty Images)
When is a house for sale, but not for sale? When it’s being privately offered “off the books” — not listed in the local multiple listing service’s database. Or it could be headed for the MLS but, for various reasons, hasn’t gotten there yet.
In either case, it’s called a pocket listing, a controversial tactic in real estate. Recently, a San Francisco-based company has put a little bit of structure into the practice. Top Agent Network has about 30 chapters across the country to allow agents to network and shop around these so-called non-MLS and pre-MLS listings.
Company founder David Faudman explained in an edited interview how Top Agent Network aims to help agents and their clients connect with one another and get houses sold faster:
Q: What’s the idea behind Top Agent Network?
A: It’s a private online business community, limited to top-producing agents to exchange all sorts of information. You can become a member if your sales over the past two years put you in the top 10 percent of local agents, in terms of dollars. We vet them. The top 10 percent typically are involved in 3 out of 4 closed sales.
The agents get to go into our website and behind the door, and they can make postings by real estate-specific categories. They might say, I have a buyer that needs (a certain type of house in a certain neighborhood). Or a seller might not want to be on the MLS, and the agent could post information about the house. Or the agent may have a listing that’s in the works but isn’t officially listed yet, and they can put it out there for other agents in their Top Agent Network area.
The company isn’t all about pocket listings — it’s a way for agents to network about, say, reliable service providers such as plumbers, for their clients. Or they may post a message asking for other agents’ help in pricing a listing.
Q: Pocket listings seem to be in the news lately, as the supply of homes in some areas has become tight and prices have surged. Are they a recent phenomenon?
A: There always have been pocket listings. When you think about it, 100 percent of all listings are pocket listings before they go into the MLS. You may have a signed listing, but it isn’t necessarily going to go into the computer that day. There is always a lead time. Generally, multiple listing services require you to get it to them within 72 hours of the listing signing. Agents who are members of an MLS typically are required to have the sellers state in writing that they understand that their home isn’t going to be listed.
Q: Why would someone want their home not in an MLS, either short-term or long-term? After all, isn’t the whole idea to sell it by giving it the maximum possible exposure?
A: There are many reasons. Some people just don’t want their home opened up to dozens of strangers, and they only want serious buyers.
Or, you’re just not ready to have it in the MLS — you have no pictures or the seller isn’t ready to share the address — and you don’t want to miss buyers who are buying right now, buyers who are ready to pull the trigger on some house, and you want to make sure yours is in play in case they’re ready to write that big check.
Another reason: You cannot stop the clock from ticking in the MLS. When it enters the MLS, it will have a date on it, indicating the number of days on the market. If it’s been for sale for, say, three months, the buyers will say, I don’t know what it’s worth — but I know what it’s not worth. Or they’ll say, what’s wrong with it?
And a pocket listing allows you to test pricing before you hit the MLS. If I put a post on Top Agent Network that says, I am readying for sale a condo that’s this big and at this price, and no agents respond, that may be a clue that there isn’t a market for that property at that price. Before I put it on the MLS and get killed, I can get a price adjustment.
Q: Why are pocket listings controversial?
A: People who object to them are mostly the agents who don’t know about them. The MLSes worry that pocket listings will undermine their relevance. That’s why they have rules requiring a listing to be in there within three days.
But there are some ethical concerns. The bigger issue is that people believe agents use pocket listings to get both sides of the transaction, representing both buyer and seller, and earn a larger commission — they’re double-ending the deal (and perhaps keeping the owner from selling for a higher price than if the house had gotten broader exposure). They say, I’ve got this great condo, but you’ve got to call me directly to find out about it. Then, if you don’t like that condo, the agent can say, I’ve got three others I can tell you about.
The truth is, it can be just the opposite. By announcing it in a Top Agent Network posting, you are announcing to the world that you’re not going to double-end the deal, because you’re sharing it with your competitors. You’re giving it broader exposure. You’re really putting it in front of your peers.