Pocket Listings Are Banned in Portland, Oregon
Pocket Listings in Portland, Oregon and throughout the U.S. have been a hot topic for many years. While some real estate agents have argued for pocket listings in the Portland real estate market, most argue against them or want sufficient regulations to protect home sellers and buyers. Pocket listings are usually defined as homes for sale that are not listed publicly in a multiple listing service (MLS) system, but privately with a local Realty company that may also promote that listing within their own house or possibly to other select Realty companies or limited networks of potential home buyers.
What Is a Pocket Listing?
In order to understand a pocket listing, you first need to know about a standard listing. In a standard listing, a homeowner or property owner contacts a real estate agent and hires them to sell a property. This is done under contract. The agent then lists the property online through the multiple listing service (MLS) and networks with other real estate agents to gain interest in the property. This setup means that other real estate agents work with the seller agent to recommend the property to potential buyers, and both parties earn a portion of the commission for the home. While there are more complicated selling arrangements out there, this is standard listing practice.
A pocket listing is very different from your standard home listing. In a pocket listing, a person wishes to sell their home without listing it online or directly interacting with other agents. During the listing process, the selling agent relies on their own connections to sell the property and does not list the property for sale through traditional channels nor the MLS. This means the home does not show up on online searches and doesn’t have conventional listing signs on the property. Once the seller agent finds a buyer, they often act as the selling and buying agent for both parties, leading to them getting the bulk of the commission themselves.
As you can see, compared to working with a seller’s agent and an agency, pocket listings rely heavily on agent connections and have a less-than-stellar history due to backhanded sales practices.
Why Would a Homeowner Choose a Pocket Listing?
You may be wondering what kind of homeowner would choose a pocket listing. Not only does it limit the buyers, but it also narrows the entire market for home sales and reduces the chance of walk-in sales interest. Most cases where someone goes for a pocket listing involve some level of privacy or anonymity, such as someone famous looking to sell their home without all the publicity. There are also cases of specialized properties going up for sale where the owner wants to limit their offers to only people “in the loop” for that specific property. In this case, it is obvious that the practice could run in danger of violating fair housing acts.
While in certain cases their may be limited potential benefits of a pocket listing, in general, this practice leads to less-than-ideal selling practices, significantly limiting the property’s marketing potential. It also can cause potential issues and open the door to underhanded marketing practices if the agent working for a pocket listing acts as both the seller’s and buyer’s agent.
A Recent History of Pocket Listing Changes in Portland, Oregon
Pocket Listings Changes in 2019
In 2019 RMLS, our local Multiple Listing Service here in Portland, Oregon, created a coming soon feature for all Realtors who are members of RMLS (and virtually 100% of them are). The policy lets local Portland Realtors advertise their listings as no-showing, coming soon listings for up to three weeks (21 days) in the MLS, where only other Realtors can see them. After 21 days, the listings must hit the public market or be taken down.
Alternatively, if a Realty company didn’t plan on putting the pocket listing for sale on the MLS at all, they could exclude it entirely from the MLS and keep it as a true pocket listing. But if that Realty company ever decided it wanted to put the same house on the public RMLS for sale, they would have to wait 30 days or more after the pocket listing was over before RMLS would let them input the listing. To get the full details on the RMLS CSN, or coming soon, no-showing rule, go straight to the source – RMLS blog. This article doesn’t contain all the details of their rule, and if you are interested, please check out their public information.
Basically, it created two tracks for local Portland real estate agents for pocket listings: they could perform some coming soon marketing with all other local Realtors in the same RMLS, but not allow showings. This would help “get the word out” before the home hit the public market, but would likely ensure there were no private sales since no showings are allowed. Alternatively, they could perform a true pocket listing and advertise it to whoever they wanted (following real estate laws appropriately) but if they ever wanted to put that same home in the RMLS they would have to stop advertising the pocket listing for 30 days or more, and then they could list it for sale in the RMLS.
Pocket Listings Banned in 2020 by the NAR (National Association of Realtors)
Well, it is a near-total ban on pocket listings for all Realtors in the United States as voted on by NAR in Nov. of 2019. Get all the details on this policy straight from NAR here. Here is the part of the policy with the most direct impact on pocket listing practices:
“Within one business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants. Public marketing includes, but is not limited to, flyers displayed in windows, yard signs, digital marketing on public facing websites, brokerage website displays (including IDX and VOW), digital communications marketing (email blasts), multi-brokerage listing sharing networks, and applications available to the general public.”
So option two above with RMLS, allowing Realtors to advertise pocket listings as long as they forego the RMLS and wait 30 days after the non-MLS agreement has expired before submitting to the public RMLS, has a further restriction, the home simply may not be advertised as a pocket listing to the public at large. The only thing NAR doesn’t prohibit here is a pocket listing that the Realtor markets off the MLS within its own Brokerage or Realty company only.
Sometimes the Seller is the Only Person Who Wants a Pocket Listing
This is little understood in the real estate industry, but many times the real estate agent and their brokerage have no interest in pocket listings – but the seller does. Sometimes sellers want a private / pocket listing because they do not want all the attention a public listing gets. They do not want thousands upon thousands of people to see interior photos of their home; they do not want the entire world, as it were, to know that their home is now for sale. Most Realtors, myself included, always prefer to put the home on the public market and to get as much marketing exposure for the home as possible, as we know it will generate the highest price for the seller.
Pocket Listings Have Changed, Probably Forever
Regardless of a seller’s desire to have a pocket listing sale, what a Realtor can do for them in 2020 in terms of a pocket listing is greatly reduced to almost a non-option. There are currently over 1.3 million Realtors in the U.S., and limiting exposure of a home for sale to only those within one Brokerage makes a pocket listing or private sale close to impossible. A pocket listing is not accessible to the general public per NAR rules; it will not be accessible to the 1.3 million Realtors in the U.S. who might bring a buyer, it will be so greatly reduced as only to be able to be seen by Realtors within the same Brokerage.
Coming Soon Homes are Good for Everyone
Years have gone by since the ban on pocket listings and the advent of coming soon homes for sale. In my experience, the coming soon home status is a benefit to the industry, the seller, and the home buyer – all at once. For all the reasons behind that, read our article on coming soon homes vs. pocket listings.
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