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Pocket Listings: Do the Risks Outweigh the Benefits?

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By Fredric W. Trester

3. The Risk of Not Being Paid.

If a property is not in the MLS, a buyer’s agent’s commission is not protected. A seller may accept the offer which is procured by a buyer’s agent, but if the buyer’s agent has no written agreement with the listing agent to be paid, the listing agent has no obligation to pay them.

As such, the buyer’s agent either must enter into a Buyer’s Broker Agreement with the buyer, or a cooperating broker’s agreement with a broker.

4. Fair Housing Violations

The most obvious would be if a seller says they want to keep the property off the MLS because they don’t want to sell to a particular group of people, such a people without families. More subtle however, are claims that the pocket listing has a “disparate impact.” This means that the practice has a “discriminatory effect” and “results in a disparate impact on a group of persons…or perpetuates segregated housing patterns…” 24 CFR §100.500. Examples include private arrangements with other agents to prevent the property to be marketed to particular ethnic groups, because all of the agents may be of a particular ethnic group themselves.

5. Anti-Trust Violations

Brokers now are creating private websites on which they list their properties to a select group of other brokers. If there are any type of minimum commission arrangements agreed upon this could be viewed as “price fixing” which is a violation of anti-trust laws. This would subject all participants in said “private MLS” to potential exposure for this violation.

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