Group finds a loophole in real estate pocket rule

This week’s decision by the National Association of Realtors to limit so-called pocket listings — the practice of privately shopping properties without putting them on a centralized listing service — has a major loophole that will limit its benefits to the public, a Washington consumer group said.

The Consumer Federation of America said agents are still allowed to market new listings within their own firm before putting them on a local Multiple Listing Service through what are called “office exclusives.” Agents will also have a smaller loophole: they can request waivers allowing a particular listing to be marketed as a pocket listing.

Even for properties clearly covered by the ban, questions remain.

“Who and how is it going to be enforced?” asked local broker Chance Brown of CB&A, Realtors. Local Multiple Listing Services, such as the Houston Association of Realtors, will have until March 1 to decide how to implement the new policy.

“Allowing agents to privately market new home listings to other individual agents does not serve the interests of either the seller or buyer,” Stephen Brobeck, a senior fellow at the Consumer Federation and author of an analysis on pocket listings, said in a statement. “Sellers may

miss out on opportunities to sell for a higher price and buyers are limited in their selection of properties.”

The national association’s 800-person board overwhelmingly voted Monday to limit the use of pocket listings by requiring agents who sell through Multiple Listing Services to submit their listings to the MLS within one business day of marketing the property to the public, whether that’s with a sign in the yard, an email blast or a Facebook

post.

In its analysis, the Federation said pocket listings are anti-consumer and and threaten a nondiscriminatory housing market. The push for pocket listings, it said, comes largely from agents who want to reduce the time and expense of marketing a property without a reduction in their commission.

“Agents who pocket list are effectively gaming the system — restricting access to their listings but retaining access to the listings of other agents,” the report said.

The rule goes into effect Jan. 1, 2020.