Here comes
the nonsense, again.
With the
Denver housing market on fire during the first six weeks of the year (again)
and listing inventory now officially at a 39-year low (unbelievable), some
practices many professionals consider “questionable” are creeping back into the
market.
One of these
practices is the “pocket listing”. A
pocket listing is a property that a broker lists for sale but never enters into
the MLS. The agent, in effect, keeps the
listing in his or her pocket and does not broadly market it through the MLS.
Why would an
agent do this?
Most times,
unfortunately, the answer is outright greed.
If an agent can get his seller to sign a disclosure authorizing the
agent to withhold the property from the MLS, that agent effectively becomes the
only one who can represent the buyer. It
means the agent is one or two opens houses from a double-ended deal, and a fat
payday.
And many
sellers, unfortunately, are so poorly educated by the agent they don’t even
know what they are signing, or why it might be desirable to have 14,000 dues-paying MLS members with buyers having access to their property instead of just one.
If you are
selling a home, and you were interested in the highest and best possible price,
why would you willingly give up access to 13,999 other brokers being able to
show and sell your property?
You can see
why there is controversy around pocket listings. Agents freezing other agents out of transactions
is never looked upon favorably, and from an ethical standpoint, you have to
wonder how many sellers (who are often older, or living out of state, or may
simply be clueless about this) really understand what is happening.
I saw a
similar practice during the final days of the housing boom in California back
in 2005. Several agents began listing
homes in the MLS so that they were fully marketed to all brokers… but with a buyer’s
agent commission of $1. Yes, one dollar.
Agents have
long memories. If, as an agent, you
decide to go down this road, you need to realize that other agents are going to
remember how you chose to do business when times were good. Because when the market changes, and it will
change one day, your reputation is all you have.
While our
market continues to sizzle and significantly lift Denver’s overall economy, the
smash and grab mentality of agents pursuing pocket listings is one trend I
could live without.
