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Agents defend pocket listings

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Guest | 18 Jun 2013, 10:44 PM Agree 0

The truth is that it’s often the client who wants to keep the listing off of the MLS and away from the prying eyes of thousands of buyers, says Sage Real Estate’s Christina Kroner, also identifying other key reasons for keeping those listings off the MLS. “Nearly all listings are exclusive at the beginning.
““It’s your opportunity as a REALTOR® to secure the listing and invest some time and money into the home that will pay off in droves once it sells."
Ostensibly, given a highly competitive market for real estate professionals, pocket listings allow agents to hold a listing and put in the necessary effort to get the home ready for sale, she tells CREW.
The comments come on the tail end of a spring market that has been slow across much of the country. The use of pocket listing may have contributed to the lower number of listings in Toronto and other urban centres, argue some critics of the practice.
At least one agent specializing in investment properties is cautioning sellers against real estate professionals who seek to use pocket listings for small multifamily properties.
“That size of property definitely should go on the (Multiple Listing Service),” investment specialist and REALTOR Banny Bar said. “In fact, I would say that buyers for any property with less than 14 or 15 doors are self-directed buyers who are looking for properties on their own and on the MLS system. For those properties pocket listing has the potential to extend the listing time and attract fewer buyers and so lower the price that the seller gets.”
It’s a lesson that an increasing number of investors may be learning for themselves as they cede to REALTOR requests to keep their properties off the multiple listings service and allow them to troll for buyers through their own contacts and via their own websites.
The incentives for the client often include a discounted commission for the agent, while that real estate professional usually avoids having to split that fee with another REALTOR.
“Pocket listings can work for the client with a larger property to sell,” said Bar, “if the real estate agent has years of experience and is connected with the buyers. Still, investors have to really know their brokers and how they plan to market the property if they are not putting it on MLS.”
  • Menno van Driel | 19 Jun 2013, 10:05 PM Agree 0
    When 90% of sales go through MLS, what are you trying to say here that I don't quite get?
  • Larissa Hadley | 20 Jun 2013, 01:30 AM Agree 0
    Pocket listings are not what should be happening. It appears underhanded and are you working for the seller or yourself. A listing may be exactly what my client is looking for and then they see it as a "sold" and ask why was I not notified? Do I tell them that the listing was pocketed until the listing agent went through their own clients and then it was MLS. No, if it is MLS then post it immediately, if not it should remain exclusive for the duration of the listing. The Seller may garner a higher price if more than one buy is interested but if it is pocketed the Seller may never know and settle for what the agent brings and sometimes it may appear that the agent and Buyer worked together. It is Limited Dual agency and may be misconstrued. Keep Realtors ethically accountable.
  • wayne miller | 20 Jun 2013, 03:12 PM Agree 0
    You are leaving the door open for those with criminal intent to take advantage of others, those with inappropiate intentions and not working in their clients best interests will take advantage of it, unscrupulous self serving agents will go to any lengths to justify their underhanded practises. Look at the US banking industry if you are having difficulty understanding. Allowing this practise is like sticking your head in the sand.
  • David Beaulieu | 20 Jun 2013, 05:35 PM Agree 0
    The poket listers are not being fair to there seller or there buyer you can't get the best price and condition if you represent both sides some one haa to give in so one pays less or the other gets a better price for his home ( conflic of intrest) this sould not be legal ! Do it but put it on MLS
  • ali | 20 Jun 2013, 07:22 PM Agree 0
    Hi Mark,

    There are countless reasons to use pocket listings. When you post on the MLS you get alot of tire kickers and people who were never qualified tying up the deal for months! Large deals can take many many months to close. Inexperienced agents, unqualified buyers, and difficult tenants come into the picture to make situations even more complex.

    This has nothing to do with the agent nor anything to do with the agent's greed not to "commission split". In the commercial world price is primarily dictated by numbers, things like cap rates, price per door, appraisals, inspection reports, etc. all play a strong role in deciding what the price of that property should be. So those agents who say they can get "more" money by listing on the MLS really do not fully understand the complexity that is involved.

    Many, if not most, seasoned real estate investors with larger properties refuse to post on the MLS specifically. They choose the countless commercial brokerage that rely on a private investor database of proven investors/corporations that are able to make a realistic purchase.

    Perhaps the MOST important point is that many sellers wish to be discrete, not have a real estate agent's face plastered all over their buildings. A pocket listing is a discrete confidential and selective process that ensures only highly qualified investors are able to put offers through and see the property. It is a streamlined systemic process and the purchasers/syndicates have proven net worth/experience.

    When listing on the MLS a large multi unit property, ANYONE can request to see it and anyone can put in an offer and a seller agent does not have much control as to HOW qualified the buyer is. So two things happen, you get tenants that are constantly disturbed as countless non-qualified individuals go through out the units wanting to "see" and a few low-ball offers that even if they materialized would go nowhere because of phase 1,2,3, appraisals, building inspections, financing, and the many more complexities. Then factor in 35% down payments on large sums of money, high interest rates, and strict lending limits makes larger properties very challenging for the inexperienced investor.

    So I guess the problem lies in that some agents do not fully understand just how expensive and complex a commercial deal can get and just follow their client's whim's by putting in an offer on a property that is too big for them to chew. }}

    Hence, why many investors prefer pocket listings and NOT the MLS. Again, I focus only on larger deals, a house or condo should rarely be put through a pocket listing unless the agent has a 100% buyer and explains to the seller the pros/cons of MLS listing vs. Pocket listing (i.e. immediate sale for a little less money vs. future sale for potentially more money).

    Great discussion :)
  • Dwayne Michel | 20 Jun 2013, 09:51 PM Agree 0
    Pocket listings make zero sense to me, the seller deserves to have as much exposure as possible to get them the best price. If you have a buyer for your listing, they will have to compete with the rest of them. I have no trouble selling my own listings as long as the seller has as much exposure to the mls as possible and the buyer is willing to pay a fair price for the home. I have never pocket listed a home ever, why would I not promote my listing to every realtor in my area by putting it on mls, that is how real estate should be done, and if its not, its no wonder are mls is losing ground to FSBO's. Us realtor's must unite and stand together to keep our real estate business strong.
  • Michael Christie | 20 Jun 2013, 11:23 PM Agree 0
    All of the same arguments that old time residential realtors used to spout 30 years ago. By not using the MLS you are not marketing to t he widest variety of buyers possible. Our business is built on co-operation. Pocketers are dismissing other realtors without knowing whom their clients may be. The only advantage here is not to the seller but rather the unco-operative realtor.
  • Jim Byrne | 21 Jun 2013, 05:07 PM Agree 0
    Not mentioned in Ali's response is the fact that some of these "pocket listing" agents refuse to share commission if another agent brings them a buyer. I personally was interested in garden home development that I had heard about from a friend. I had my agent find the listing. He called the listing agent and asked if they would share commission. The answer was a short and definite "no". This isn't in the clients best interest. I was not interested in dealing with this type of agent so I didn't purchase. Client loses sale, agent holds out for full commission and eventually gets it but did client get best price?
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