A Typical Pocket Listing scenario: The Agent takes a Listing on Friday. He puts the sign in the yard. But, the Agent waits until Monday to put the Listing in the MLS! The reason - if the Listing Agent can sell the house himself over the weekend, he can keep "both sides" of the Commission!
The term "Pocket Listing" in this Blog refers to an Agent keeping the Listing Agreement in his pocket for a few days, and not giving it to his Broker or assistant for entry into the Multiple Listing Service. The Seller is not aware of the pocketing; the Seller believes that the property is going into the MLS.
Definitions of the term "Pocket Listing" vary; there can be Pocket Listings where the Seller is fully informed and in agreement with the Listing Agent withholding the property from the MLS.
Many houses sell within the first few days after the house is put up for sale. This is especially true in a sellers' market. The temptation for the agent to Pocket the Listing may be strong!
What Harm can there be in Pocketing a Listing?
What about Ethics? What about Fiduciary? What about the best interests of the Seller?
Other Real Estate Agents may have potential buyers for that house. What if those other potential Buyers would have offered more money for the house? What if those other Buyers could have created a multiple offer situation for the Seller?
How about the Grief and Inconvenience a Pocket Listing causes for other Real Estate Agents who get calls on that For Sale Sign?
Any Agent who has been in the Business for a while has probably encountered a Pocket Listing. They have experienced the frustration of a Buyer seeing a sign and wanting to get in the house, but the Listing Agent says, "Sorry - it is not yet in the MLS and there is No Lockbox. I will have it in the MLS in a day or two."
Are any written terms in the Listing Contract broken by an agent who pockets a Listing?
Probably not, as long as it is entered into the MLS by the agreed upon time, for example, 2 Business Days. But Real Estate Agents should hold themselves to a higher moral and ethical standard than simply complying with terms and dates on a Contract!
In their quest for the Entire Commission, a Listing Agent who Pockets the Listing may be harming the Seller!
Disclaimer: Nothing in this blog article is to be construed as legal advice, tax advice, or financial advice. For legal advice see an attorney. For tax advice or financial advice see a tax attorney, certified public accountant, or other qualified professional.
Frederick Griffin, Licensed Real Estate Broker Tallahassee, Florida