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Jim Klinge, broker-associate
617 Saxony Place, Suite 101
Encinitas, CA 92024
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Jim Klinge
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701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011

Posted by on May 24, 2018 in Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training, Realtors Talking Shop | 12 comments | Print Print

The Trojan Horse of Real Estate Sales

What never gets mentioned is that every realtor has signed an agreement to share their listings with one another.  This is how realtors are destroying the industry from within – because we foster the illusion of having a cooperative MLS but are happy to deprive our own sellers of open-market exposure in hopes of making two commissions. 

The practice is so common that I don’t think realtors give a second thought to upholding their fiduciary duty to their own client, the seller:

Pacific Union International, California’s second-largest residential real estate broker by volume, is launching a new service this week that will give the public a peek at its “off-MLS listings,” meaning homes for sale that aren’t on a Multiple Listing Service.

It’s the latest in a growing number of ways home sellers can test the market — and maybe get an offer — before embarking on a full-on marketing campaign.

Putting a home on the MLS is usually the best way to get top dollar because it provides the greatest possible exposure. But in a red-hot market, some sellers figure they can bypass the MLS — and the real estate websites that repost their listings for the whole world to see.

Currently, agents circulate these “off-MLS” or “pocket” listings inside their firm and with other agents through Facebook groups or email lists. Some share them with groups such as Top Agent Network or Marin Platinum, which restrict their membership to high-volume agents.

Instead of holding a public open house — with strangers and neighbors traipsing through — agents arrange private showings.

Pacific Union estimates that 20 percent of its home sales in the Bay Area and 30 percent in Los Angeles last year closed without appearing on the MLS.

Mark McLaughlin, Pacific Union CEO, says Private View will help buyers and sellers by giving greater access to his firm’s off-MLS listings: “We are taking secrets in our filing cabinet and exposing them to the public.” He agreed that the MLS provides “maximum exposure,” but for clients who don’t want that, this is “an incredible” alternative.

“Once we get critical mass, I think more sellers will be part of this,” Segal said.

In a market starved for inventory, that may not be welcome news.

Pocket listings have always been used, mainly by celebrities and people selling extravagant homes that only a few could afford. But their use in California has grown since 2013, as the housing market rebounded and bidding wars broke out.

“As inventory goes down, off-MLS practices go up,” said Jim Harrison, president and CEO of MLSListings, the listing service for Santa Clara, San Mateo, Santa Cruz, Monterey and San Benito counties.

He estimates that 21.6 percent of all homes sold in those counties in the first quarter did not hit the MLS before they closed. That compares with 12.6 percent in the first quarter of 2012. (Many agents enter a sale into the MLS after it has closed to help establish comparable prices for an area).

The California Association of Realtors discourages pocket listings. In a 2013 press release, it said most sellers want the highest possible price from a well-qualified buyer, and the best way to get that, the association said, is to put the home into the MLS.

Most Multiple Listing Services are owned by local Realtors associations. Agents who join an MLS generally must post homes on the MLS within a few days of signing a listing agreement, unless the seller signs a waiver.

Every member of an MLS has access to those listings. They also go out to real estate websites such as Zillow and Redfin.

Pocket listings can lead to ethical, antitrust and fair-housing issues, the state Realtors association said in 2013.

Sellers typically pay a commission to their agent, who shares the commission with the buyer’s agent. In pocket listings, it’s easier for agents to keep the entire commission to themselves, or within their brokerage firm or a small network of outside agents.

Agents say there are many reasons to keep a home off the MLS, at least temporarily.

“My preferred way is to market heavily off-market for a week or two, and then go onto the MLS,” said Cathy Youngling, an agent with Paragon Real Estate Group of San Francisco. That way “I have built a level of excitement and enthusiasm” before the “time on market” clock starts ticking.

Link to Full Article


  1. If the NAR were the SEC half the agents and brokers would be banned for life for conflict of interest.

  2. And it’s only half because only half of the agents sell anything.

  3. > “My preferred way is to market heavily off-market for a week or two, and then go onto the MLS,” said Cathy Youngling, an agent with Paragon Real Estate Group of San Francisco.

    off-market, Youngling, Paragon, SF, … how many red flags do we need?

  4. And she is happy to publicize her deceit in a national newspaper – she thinks it is fine, and the ‘preferred way’.

    Hopefully, an enterprising district attorney will latch on to this.

  5. Prosecution? Is “Super J” eligible for parole yet?

  6. Not only did she not spend a day in jail, she was never prosecuted.

    The kingpin did spend a couple of years and is out now, walking around among us.

  7. Don’t forget Compass whose internal software relies on keeping the home internal and off the market so they get a commission on both sides. This is not in the public’s best interest.

  8. Thanks Jim, and specifically it’s not in THEIR OWN CLIENT’S best interest.

    But it keeps happening everywhere, out in the open where everyone can see it.

  9. What gives?

    We are here to steal your money (not me, but other realtors).

    Consumers should investigate thoroughly, but they don’t – instead, they ‘trust their gut’ and hire a nice person who promises to take care of them.

    They got taken care of alright.

    I can tell you a story that just happened this month. A lady who was born and raised in a realtor family – her father was a realtor for 35 years – decided to sell her home.

    But for some reason, she was adamant about not using a realtor.

    She was at the grocery store, and brought up her desire to sell. A stranger offered to buy her house, and she said, ‘As long as I get my $650,000, I will”. He suggested making it $675,000 so he could make a 3% commission, and she agreed.

    They closed escrow a couple of weeks ago.

    When a family member heard about it, he called a trusted local realtor to check market value.

    The realtor told him, ‘I just sold a house just like that one a couple of blocks over for $895,000’.

    If you don’t want this to happen to your friends and family, then tell them to use me for their real estate needs.

  10. Good story.

    I just don’t understand how that house sold for that. It was never listed, did the whole “sold before processing” but even though it was listed at $1.170 (Which was also way too low) they took an offer $200k below list before listing? It just makes zero sense. Did the realtor buy it himself? If so, is that legal?

    Did they sell to a family member or friend to lock in lower property tax? Would that be legal.

    Does this kill all comps in neighborhood?

    As someone else mentioned, if this were financial services (SEC/finra), half the realtors would be in jail.

  11. The buyer was an LLC so it’s likely we’ll see it back on the market with some lipstick before long.

    Agent is a long-time veteran realtor who works for an upstanding company, and she can’t say she represented the buyer only because only listing agents can input listings onto the MLS.

    Fortunately for them that this happens so often that the appraiser who comes out next month on behalf of the retail buyer will shrug off the previous price. They have to note it on the appraisal, but as long as there are other higher comps nearby it will be forgotten.

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