Pocket Listings vs Coming Soon: Don’t Make This Mistake

TL;DR: Pocket Listings are NOT put in the multiple listing service (MLS).

Coming Soon listings ARE put in the MLS.

Read more on why pocket listings are bad! Coming soon listings are good!

And also why real estate agents shoot themselves in both feet on this issue.

The Difference Between “Coming Soon” and a “Pocket Listing”

Coming Soon is GREAT!

A coming soon listing is a status field in the MLS. An agent puts the property listing in the MLS like any other listing, along with an expected “live” date when it goes from Coming Soon to active. Every MLS I am aware of requires that a Coming Soon listing be set to active before being withdrawn from the MLS.

Here is the first place Realtors shoot themselves in the foot.

The confusion between pocket listings and coming soon listings leads many agents to lump the two together, and think that Coming Soon is a pernicious tactic for agents to double-end a transactions.

Agents are suspicious of anything that smells like a listing agent trying to find a buyer themselves to the exclusion of other agents.

For this reason, many agents despise the “Coming Soon” property status in the MLS, and have torn it from the MLS in more than one MLS that I’ve been a member of.

For example, Austin got rid of their Coming Soon status in 2018. Their rationale was:

The ABoR Board felt that Coming Soon Status was subject to misuse and confusion, which created unintended disorder in the marketplace.

BANG! Foot shot.

They’re right that there is confusion, but the answer is to educate members, not make the problem worse.

The “Coming Soon” status is the opposite of a pocket listing. Instead of an agent keeping inventory to themselves, including inventory that is not even on the market yet, they are trying to share it with everyone on the MLS!

This is good for their sellers, getting visibility of their home ASAP while the rest of the cleaning, pictures, open house preparation, and advertising is still coming into place.

Meanwhile, the agent is being 100% transparent. Every member of the MLS can see their listing. They are hiding nothing. And no potential buyers are excluded.

Pocket Listings are EVIL!

So instead, Austin agents no longer have a method of being transparent.

If you think there was abuse before, well now there is no transparency or accountability. Who knows what kind of abuse is going on.

Pocket listings are those that an agent keeps to themselves, showing to their own network of buyers or a select number of brokers they choose to.

Pocket listings are not illegal if home sellers agree to it. The Texas listing agreement, for example, has a paragraph essentially warning homeowners not to check box 2.

But if the homeowner checks it, the listing agent doesn’t have to list the home in the MLS and the pocket listing is perfectly legal.

Pocket listings seldom serve the consumer, the seller, and instead often serve the listing agent. By shopping the listing only to their own buyers or networks they have the greatest chance of getting both ends of the transaction.

BANG! Other foot shot.

Of course, a listing agent is a fiduciary to the seller, and it is unethical to put your interests above your clients. But pocket listings walk a tightrope between ethical and unethical, and even well-intentioned agents can slip.

Except When….

Privacy is about the only case I can think of in which pocket listings might be appropriate.

Some sellers, especially luxury sellers like celebrities, want a certain amount of privacy. They do not want the whole world to know that their home is for sale and are willing to risk a lower-than-market price for that privacy.

The aptly named pocket listing service The Pocket Listing Service makes it fairly clear there is one main reason that a seller would want their home off the MLS. Privacy.

Their website reads:

Pocket listings have long been a staple of the Real Estate industry. Yet searching for and offering such listings has historically been a complicated and unnecessarily labor intensive task, until now. The PLS allows listing and buyers agents to list and search for pocket listings in their area without compromising buyer or seller privacy.

PLS is not the only pocket listing service. TopAgentNetwork (TAN) is another such service.

Homes shared here won’t end up on Zillow, Trulia, Realtor.com, and local agent IDX websites.

And that’s fine if that is really important to your seller. Get it in writing and make sure they understand the consequences!

The Perverse Effort to Double End the Transaction

I don’t want to knock on dual agency and intermediary too much.

I think there is absolutely nothing wrong with what in Texas is called an intermediary with assignments. Sure, technically both buyer and seller are represented by the same person, the broker. But each party has their own agent who has their own fiduciary obligation to the client. That is just fine.

It does bother me, though, the brokers who are a little too eager in trying to double-end the transaction.

These are the brokers yelling in the Inman comments sections that “we own the listing” and wanting the online buyer inquiries to come to the listing agent.

They are the ones in the listing appointments boasting of their large database of home buyers, as if that is somehow a benefit to the seller.

Top real estate agents in most markets often represent maybe 5% of the transaction volume. Their buyer database is only going to have 1/20 buyers. If I am a seller, I want to know that my listing is getting good exposure to the other 19/20 buyers in my marketplace, too. I’m not too interested in what fraction of the market happens to be working with my listing agent.

All that said, I do know it’s still a selling point in the listing appointment. And services like Buyside and SquadVoice do add value and insights to the discussion while also maximizing a listing agent’s chance of keeping the entire transaction in house.

But there are serious risks of being too enthusiastic about representing both sides of a transaction. Focus on your client and their needs.

Revenge of the Pocket Listing?

Jim Klinge at Bubbleinfo.com pondered back in January if perhaps there is a trend of using off-market listings as a lead generation strategy. And it seems some big players are betting on this exact strategy.

Will this lead to fragmentation in our industry? Will buyers have to go to multiple sites to get a full picture of what is for sale?

Unfortunately that is already the case, and it might be getting worse.

For example, there are two portals in the iBuyer game right now: Redfin and Zillow.

Redfin lists its own inventory as Coming Soon, visible only on Redfin sites.

Zillow lists its own inventory as Coming Soon, visible only on Zillow sites.

I don’t have the MLS in these respective markets, but my guess is that neither listing is on the local MLS. Though it is possible that they do list them as such in the MLSs that allow Coming Soon statuses.

Note: I didn’t find any exclusive inventory or coming soon listings from the other iBuyers like Opendoor, Knock, or Offerpad, at least not where it wasn’t also an MLS feature. Although all of these sites did enable you to exclusively search the company’s listings.

But it leads to more questions. It’s not just iBuyers. The upstart brokerage Compass has embarked on what appears to be a campaign to create its own ecosystem of listings, forcing buyers to their site if they want to see homes for sale. It’s a way to compete online with the more established portals like Zillow and Realtor.com.

The ploy could work in markets that Compass has massive market share like San Francisco. But does that trend really help buyers and sellers who just want a marketplace to see homes and get their homes seen?

In a recent Industry Relations podcast, Rob Hahn wondered if this trend continued whether MLS will become the marketing place of last resort. If it is only for pocket listings that failed to sell in the broker’s network.

I think that is unlikely, because it overlooks the main problem with pocket listings: they’re bad for sellers! Firms that continue to get their clients’ listings the most exposure I believe will continue to thrive at the expense of companies hoping to make money from hoarding listings.

Who knows what is the future of home buying and selling. But I hope it’s not “exclusive listings”.

The Solution

The solution to pocket listings is simple.

Every MLS should have a Coming Soon status.

Then nobody has an excuse to fragment information about real estate listings on their own websites. Everyone has the same information thanks to their link to the the MLS via IDX or syndication.

Instead of competing by hoarding information we can compete on service and user experience.

Yes, there is still a place for pocket listings for sellers who want privacy. Yes, there is still a place for marketing to your own database.

We can do all of that without throwing out Coming Soon because “it’s confusing”.

Conclusion

Sharing information is the entire point of the MLS. Why not use it to share Coming Soon information? Stop shooting yourselves in the feet, Realtors!

Coming Soon statuses are ethical and transparent, and the best way to combat shady pocket listings. There’s no excuse not to put your clients’ home on the MLS!