What is a Pocket Listing and
Why is it Now Illegal in Washington?
Pocket listings are basically listings that an agent keeps in their back pocket, so to speak, without listing them on the local Multiple Listing Service. The idea is that a buyer would find the idea of buying a property off-market more alluring than facing competition for that property on the open market. The problem with this approach is that it is ripe for discrimination in housing, as it creates an easy path to violations of fair housing laws. It also, certainly in most cases, does not guarantee the highest and best sale price for the seller. Maybe in some rare cases a seller would net more on the sale of their home -but how would one know if that were the case unless the purchase opportunity were exposed to the market at large?
With regard to Fair Housing Laws, Washington State Fair Housing laws broaden the Federal Fair Housing list of protected classes to include not only the Federally protected classes defined as race, color, national origin, religion, sex (including gender identity and sexual orientation per HUD interpretation), familial status (families with children under 18), and disability -but also marital status, sexual orientation/gender identity, military/veteran status, and use of a service animal. One can easily see how limiting exposure to only the people that the Seller wants to alert, opens the door to so much potential discrimination. If a Buyer in a protected class believes they were discriminated against, they can file a complaint with the Washington State Human Rights Commission, requiring the Seller to justify their actions. According to RCW 49.60.225, penalties could include a $10,000 fine for a first offense, $25,000 if it is a second offense, and up to $50,000 if they have committed more than two violations prior. Does that sound like a reasonable risk for the Seller and/or the agent?
In a remarkable and developing story, the world’s largest real estate brokerage, Compass, has joined forces with both Redfin (and its parent company, Rocket Mortgage) that will allow “coming soon” and “exclusive seller” listings to be broadcast on Redfin’s website. This would end-run the system of Multiple Listing Services across the country. Compass CEO, Robert Reffkin, contends that bringing more “coming soon” and “seller exclusive” listings to the market will help to ease supply/inventory issues that have plagued the industry for decades. Detractors say that this will limit transparency and access for buyers. I tend to agree with the detractors. So, apparently, does the Washington State Legislature, who recently passed SSB 6091. The Bill, once signed into law by the Governor, stops Compass in its tracks here in Washington by clearly “Prohibiting real estate brokers from marketing residential properties to an exclusive group of prospective buyers or real estate brokers.”
In conclusion, Pocket Listings limit market exposure for the Seller and increase the likelihood of discrimination in housing by the Seller, intentional or not. What Compass and Redfin are doing, in the search for ever more profit, could lead to either the positive evolution of our national system of privately owned, or NAR owned, Multiple Listing Services, or to a system of private listings that require ever more dollars from the Seller in order to capture exposure that is currently guaranteed by our existing system of Multiple Listing Services. Here in Western Washington, the Northwest Multiple Listing Service is the most important of these providers. It has stood strong on the side of the consumer and agent alike, by maintaining open and transparent listing requirements. Seller sponsored offers of Buyers Agent Commission are still clearly broadcast. In my opinion, a Seller utilizing this system will benefit the most because of the most complete market exposure possible. So, do you think Pocket Listings benefit Sellers? Or, do you think that they limit market exposure, and in turn, limit the maximum return on the Sellers investment?
