What are ‘pocket listings’? Are they legal?

ORLANDO, Fla. – July 1, 2013 – Non-MLS listings are legal in Florida; but if not handled correctly, they can create legal and fair housing problems for a listing broker.

“Pocket listing” is not a legal term. It generally refers to any listing held back from the local MLS and sold independently.

Since an MLS exposes a home to areas far and wide, it creates competition and can maximize profit for the seller. However, some sellers don’t want that kind of exposure, and they see a bigger advantage in keeping their home out of the MLS. Celebrities may be the best example. They don’t want any army of fans touring their home – fans that can’t afford the home in the first place. Non-famous sellers may opt for a pocket listing because they fear vandals or they want to keep the details confidential.

“There are legitimate reasons to withhold a listing from the MLS,” says Florida Realtors’ Vice President and General Counsel Margy Grant. “But while the sale is legal in Florida, it can sometimes indicate a bigger problem. For that reason, it’s important for sellers to fully understand the ramifications of a non-MLS listing, authorize it and – most importantly – for a Realtor or broker to have some kind of documentation showing that the seller made an informed choice.”

Legal

Non-MLS listings can sometimes lead to disgruntled sellers who decide, after the fact, that they could have received more money for their property. A broker could face allegations that their failure to put the property in the MLS deprived the seller the ability to attract the highest and best price for their property.

“We can’t predict the future,” says Grant. “Florida brokers should make sure the seller chose to withhold their property from the MLS. Sellers should be told the pros and cons upfront. But even proving that the seller willingly chose to withhold the property from the MLS may not be enough. A broker should also show that the seller understood the marketing advantages of an MLS before he made a decision.”

Disparate impact – fair housing

“In some cases, a non-MLS listing could lead to allegations of discrimination,” says Grant. “Realtors would turn down a seller who wants to withhold a listing from MLS in order to keep a specific race or other protected class out of his neighborhood. However, the fair housing laws go a step further, and these listings could break the law even if discrimination isn’t intended.”

“Disparate impact” under the Fair Housing Act considers it discrimination if a practice “actually or predictably results in a disparate impact on a group of persons or creates, increases, reinforces or perpetuates segregated housing patterns because of race, color, religion, sex, handicap, familial status or national origin.”

Since a non-MLS listing is marketed to a private and usually small group, the makeup of that group becomes important. If the makeup of the listing group tends to mirror the makeup of the neighborhood, it could appear to perpetuate discrimination without meaning to do so. Multiple pocket listings in a single neighborhood could be seen as a way to discriminate without being obvious.

“The disparate impact appearance can be challenging,” says Grant. “If there’s any concern about a fair housing impact, a broker should be able to justify the reason it was withheld from the MLS and illustrate that the property was marketed in a fair and equitable manner.

© 2013 Florida Realtors®

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