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Friday, Dec 9, 2022

Pocket Listing Ban: Boon or Bummer?

A recent move by the National Association of Realtors to ban pocket listings has drawn conflicting reactions from Orange County’s luxury real estate brokers.

Pocket listings, or for-sale properties not listed with the MLS, is a popular selling strategy among luxury brokers across the nation—and by high-net-worth sellers seeking a low profile when listing homes.

A shake-up is coming.

The ban—formally a “Clear Cooperation Policy”—hits in May but may not be as black and white as some expect or fear.

Transparent, Equal

Last month in San Francisco, the NAR board approved the policy, requiring agents to list properties on a multiple listing service, or MLS, within one business day of being marketed to the public.

The move is aimed at restoring transparency to homebuying and preventing agents from acting in their own interest as opposed to the interest of their clients.

Local real estate broker John Stanaland argues that agents who employ pocket listings often “hoard their listings, keeping them from the public and other brokers” to represent both seller and buyer and take the whole commission.

“I think the ban is a good thing for the industry,” said Stanaland, one of the top brokers in Laguna Beach. “A seller should have access to an unlimited buyer pool.”

Steve High of Villa Real Estate echoed this: “Overall, the ban is a positive thing. Pocket listings have eliminated exposure to entire marketplaces,” with homes selling for less than their true worth.

Redfin, an online real estate brokerage that once included pocket listings on its website, has also voiced support for the ban.

High also sees some value in off-market listings.

“We work for the client. If a seller wants to keep their home out of the MLS, they should have that option.”

Compass, a brokerage with a growing presence in the local luxury market, shared concerns about the ban.

“Homeowners in Orange Country should have the final say in how they decide to market their home,” said Cory Perkins, head of inventory strategy and operations.

Perkins added that the ban could eliminate “pre-marketing techniques that have long enabled agents to optimize a listing before it goes out to the broader market.”

Perkins said, “imposing a one-size-fits-all marketing approach will have a negative impact.”

Seller Status Quo

The NAR has said the ban isn’t aimed at sellers who want to remain anonymous so much as agents approaching a seller and promising access to a non-public process. Sellers who choose—and initiate—the strategy should still be able to do so.

So, it’s fair to say this strategy won’t eliminate off-market listings. But if information about the home is shared with the public, the listing must go into the MLS as well.

This also goes for companies that display “coming soon” listings on their website that are not marketed elsewhere—a method Redfin previously used. Redfin, in backing the ban, said while coming-soon listings “can build excitement about the home [and] lets you test a price range,” all should have access, “not just one group of privileged buyers.”

Villa’s High figures less than 10% of local sales are pocket listings and the ban “won’t have a dramatic effect” here.

“I think what will end up happening is a normalization of the marketing process for our listings,” he said. “Agents should be able to work within these boundaries, while also meeting the needs of sellers and buyers.”

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