As the market heats up and inventory of available homes gets scarce in many neighborhoods, we’ve been hearing numerous reports about properties being sold as pocket listings without cooperating with buyers’ agents.
According to the California Association of Realtors (CAR), this practice, if not handled properly, may “expose the listing office and sales agent to unnecessary liability and other serious consequences.”
CAR describes an off-MLS or pocket listing generally as “a listing agreement that the listing broker does not disseminate in the local Multiple Listing Service (MLS) to which he or she is a broker participant.”
According to the CAR, this practice may run afoul of the MLS Rules which “generally requires a broker participant to submit to the MLS all listings for one-to-four residential units and vacant lots located in the MLS service area. For a listing agent to arrange for a pocket listing to bolster the listing office’s own compensation and disregard the typical seller’s interest to procure the highest and best offer is very likely to be, among other things, a breach of the listing broker’s fiduciary duty to that seller.”
The CAR writes, “If, on the other hand, a listing agent fully discloses the consequences of not disseminating a listing in the MLS, a seller may voluntarily opt to forego the market exposure afforded by the MLS. In that instance, the listing agent should obtain the seller’s informed consent to exclude the listing from the MLS (C.A.R. Form SEL), and timely submit it to the MLS to avoid potential liability, including legal, ethical, MLS, and licensing violations.”
This is provided as general information for both buyers and sellers. You should always consult with qualified legal counsel about your particular situation.