Transcript00:00:00 music[Speaker] Kathy Fettke: The MLS isn’t the only place to find homes for sale. There are studies that show more and more sellers are opting for exclusive listings, and that is limiting buyer options. Also known as “pocket” or “whisper” listings, buyers might want to work with an agent who has them. But beware, pocket listings are best for the broker, and not always the best option for buyers and sellers.Hi I’m Kathy Fettke and this is Real Estate News for Investors.There are many reasons for the current shortage of homes for sale. The pandemic delayed many seller plans to list their homes. The record low mortgage rates encouraged many to refinance with dirt cheap loans and remodel instead of moving. Many baby boomers are choosing to “age in place” which keeps those homes off the market. And there’s been a housing gap, in general, for many years. But there are headlines out there that blame another phenomenon. According to the Washington Post, many real estate experts say there’s been an increase in these so-called pocket listings, which keeps them out of the public view. (1)Increase in Pocket ListingsAlso known as office exclusives and private listings, these homes are not listed publicly on the MLS. They are marketed privately to potential buyers and other agents and brokerages.A realtor in the D.C. area told the Post: “We’re seeing an increase in the number of office exclusives, and I’m not a fan of them from the consumer perspective.” But he says an increase in buyers makes it possible to attract more of them to these private listings, even though they don’t really benefit the buyer.They are not that great for the seller either, but they are good for brokers who can earn the entire commission for both seller and buyer. So there’s incentive for the broker to encourage private listings.Why Sellers Choose Pocket ListingsSellers may also have a few good reasons to choose this strategy, and one big one for not choosing it. Moving.com offers some pros and cons. (2)1 - Sellers may want to test the market and see if buyers are interested.2 - Sellers may want to test a price especially if they aren’t willing to negotiate.3 - Sellers may want to keep their real estate transactions private and avoid an open house.4 - Sellers don’t want their home to languish on the MLS and be viewed as a problem.On the downside, sellers will have fewer buyers considering the purchase of a home. That could mean less competition, fewer people to bid up the price, and fewer offers to choose from.Not Much Benefit for BuyersFor the buyer, pocket listings make it harder to find those homes. Many sellers also choose pocket listings because they don’t want to negotiate, but in today’s market, that could actually hurt sellers since a majority of them are offering more than the listing price.Another drawback with pocket listings is their potential to create a bias in the market, because real estate agents may end up marketing homes to certain people. Redfin CEO Glenn Kelman says: “Study after study shows that pocket listings disproportionately exclude people of color.” He cites housing market researcher Elizabeth Korver-Glenn who told him that a ban on pocket listings would help close the race gap in homeownership.Her research shows that many brokers will market private listings to their own connections, and those connections will reflect their own ethnicity and background. That would naturally create racial subdivisions in the marketplace.Kelman told the Post: “We have to ask sellers to be part of supporting the Fair Housing Act.” But some agents feel that a policy by the National Association of Realtors that’s meant to prevent private listings, actually encourages them.NAR passed the Clear Cooperation Policy in 2019. It requires MLS members to list homes one day after they have been marketed in any way to the public. But it also gives sellers the option to keep their homes off the MLS. And apparently, those sellers have grown in number.R