Pocket Listings Undisclosed
The C.A.R. published more information on pocket listings, summarized here:
The real problem isn’t getting addressed.
The “pocket” realtors usually don’t tell the sellers they are going to pocket the listing – and if the sellers aren’t paying attention, they will never know.
Seller will see the sign pop up in the front yard, and think that their agent is doing the job. Even if sellers verify that their home is listed in the MLS, they don’t know exactly what goes on behind the scenes unless they are really paying attention:
- The listing agent can input the listing, but then shut down the showings. Once they get an offer or two, some will start telling other agents that it’s too late, even though they haven’t accepted anything.
- Listing agents can also throw away offers. I submitted a cash offer that was $40,000 over the list price on an REO listing on the first day it hit the MLS. The listing agent said that the bank wasn’t taking any more offers, which I told him was hard to believe. Sure enough, 30 days later it closed for full price, and he represented the buyer too.
Brokers and managers promote in-house sales, and some pay bonuses too. They have weekly office meetings where they discuss new listings to see if they can match sellers with buyers prior to MLS input.
You would think that the primary motivation is for the listing agent to represent the buyer too and get both commissions. But you’ll see several of these completed where the buyer is represented by a different agent. Either the listing agent is going to extreme measures to hide the facts, or it was a pre-arranged deal.
Some of these sales close for what appears to be top dollar, but you will never know for sure unless the property is exposed to the open market.
There is no enforcement of any laws, rules, or ethics – realtors are expected to treat their own clients honestly. But you’d be surprised at how many of the highly successful and well-known realtors participate – and the president of the association of realtors confirmed it on our talk show.
It is old-school to look the other way, and by now it is deeply embedded throughout the industry as new agents see the old veterans rip off their own clients regularly in order to score a bigger payday.