Is Your Realtor Acting in Your Best Interests?
"Ambulance chaser"; we've all heard this popular derogatory term used to describe a lawyer chasing pay checks unethically, right? Well, unfortunately there are Realtors and brokerages out there that participate in unethical practices too, and while not illegal (yet) I'm proud to say our brokerage and our Realtors do not and never will practice "pocket listings".
Unethical Realtors Cost You Money
The rising trend of "coming soon" signage & "pocket listings" is raising legal, ethical questions. Driving around neighborhoods you perhaps have notice "Coming Soon" signs, which is about as ridiculous as pre-foreclosure websites that charge monthly fees to unknowing consumers.
The use of such signs has been questioned by cooperating Realtors and their buyer clients who wish to view a home that at first appears to be for actively for sale, then informed the property is not ready to be shown, only to find out that the property is under contract a few days later. A huge waste of buyer's and other Realtor's time.
It would seem that some real estate brokerages and agents are succumbing to typical American corporate greed as well, with an eyebrow raising practice on the rise referred to as "pocket listings." This is a slang term used to refer to listings that are held by the listing brokerage, not submitted to the Multiple Listing Service (MLS) or made available to cooperating Realtors to show. In some cases the listing is held back for a portion of the listing term and in other cases for the entire length of the listing.
This practice effectively keeps the listing "in-house" and the brokerage and agent coup the entire commission. If you're new to buying a home, a standard commission is 6% of the final sales price, and typically 3% to the listing agent, and 3% to the buyers' agent and their respective brokerages each taking a percentage of the agent's commission called a "split". Agents by law must work under a brokerage. Again, this practice is done to line the pockets of the agent and the brokerage, the home will sell to a buyer represented by an agent of the same brokerage or the agent selling the home increases their odds of a double dip being both buyer agent and listing agent, creating "dual agency".
Serving a Clients' Best Interests Should Always be a Realtor's Focus
Real estate agents (for the most part) work very hard to protect your interests, save you money and find you the right home or help you net as much as possible in your time frame to sell, and buying or selling a home is not anywhere near like selling or buying a car. While it's fair and reasonable for a real estate agent to make an income, even a good one, this unethical practice hurts both the seller and the buyer. Fewer buyers will know about and see the home, delaying the sale and perhaps reducing what the seller may have netted, and the home that may have been perfectly suited to you may never come to your attention or to your Realtor.
Make a distinction though, between "Coming Soon" signage and "pocket listings". A "Coming Soon" sign is not illegal, and sometimes used to create a little buzz and hubbub about a property before it's listed, and all that is needed is the owner's permission to place such a sign in the yard, however, if the property doesn't get listed into the local MLS once it's agreed to advertise the home as for sale, it then becomes a "pocket listing". Sellers beware, this is where you lose out on potential qualified buyers interested in the home, location and price range.
Realtors and brokerage that practice such things should consider what a fine line it is regarding misrepresentation and potential consequences with regulations and laws set forth by the Ohio Commission of Real Estate, and fines or worse invoked by the Ohio Division of Real Estate who carries out the law. The National Association of Realtors frowns heavily on these practices, and it flirts with many violations of our strong Code of Ethics.
Bottom line? If you're going to list, make sure your selling your home with a Realtor that will indeed have your home on the MLS in a timely manner, and effectively advertise in your best interest, not theirs. If you're buying a home, your Realtor should advise you accordingly if the home is not found on the MLS and endeavor to ensure you're not wasting your valuable time on a pocket listing.
As stated above, one of the most common complaints about "Coming Soon" signs is that the listing agent will not allow other Realtors to show the property because it is not in "showing" condition, but will show the listing to his own buyers and may even write an offer for them. Other Realtors and their buyers who were refused access to the property are understandably upset when they later see it in the MLS in a "pending" status or see a sold sign on the property.