Off-market listings have long been a controversial topic, with agents who oppose them claiming they provide an unfair advantage to brokers at the top end of the market.
But Redfin CEO Glenn Kelman sees another problem: These so-called pocket listings also exclude minority homebuyers.
In an opinion column in Inman and in Twitter posts, Kelman wrote how brokerages often hold 10 percent of their listings off market, spanning cities like Chicago, Minneapolis and Columbus, Ohio.
“Study after study after study shows these excluded buyers are disproportionately people of color,” Kelman said. “This is why marketing every listing to the public isn’t just one way to make housing more fair. It is, according to housing scholars, the first principle of a fair market.”
In late 2019, the National Association of Realtors approved a measure that bans its members from taking pocket listings. The Clear Cooperation Policy requires brokers to submit a listing to a multiple listing service within a business day of marketing a property to the public. The policy is designed to even the playing field for all brokers and maintain the MLS as a one-stop shop, according to NAR.
But the ban had a loophole that allowed big brokerages to utilize pocket listings as “office exclusives,” Kelman said in his column on Tuesday. In a series of tweets Kelman sent the same day, he noted that agencies had taken advantage of that loophole.
“With competition fierce,” he said, an agent will utilize the pocket listing “to recruit new home buying customers. It’s hard to argue this benefits anyone but the agent.”
Kelman cited an analysis from his own company that suggests the share of off-market listings jumped by 67 percent from November 2019 — when Clear Cooperation Policy was approved — to March 2021.
He suggested NAR close the “office exclusive” loophole, and advised MLS platforms to limit how a home is marketed by syndicating data about listings without photos or price points.
Another alternative, he said, would be to require agents to share their listings with other agents if not with the public. Kelman supported Clear Cooperation Policy when it was proposed and made a similar call about opening up the market for more minority homebuyers at the time it passed.
The debate over pocket listings has been raging for years.
Clear Cooperation Policy took effect last May and soon after, NAR — the nation’s most powerful real estate trade organization — was slapped with two antitrust lawsuits. One of those suits was filed by Top Agent Network, a networking and communication platform open to agents that meet a certain criteria. Its founder, David Faudman, has said the rule could “destroy” his business and that NAR was “trying to eliminate competition.”
In December, one of the plaintiffs on the lawsuits, Pocket Listing Service, relaunched as a public-facing site. It will allow agents and the public to search exclusively for private listings after one business day.