Why do sellers limit their sale price with an off-market pocket listing?

Question: Pat, I have concerns about a real estate practice called dual agency and its potential impact on home sale prices. Years ago, you wrote about “pocket listings” — private sales within a single realty firm without total market exposure. Ten years ago, this happened to my parents’ neighbor, whose home sold for an estimated $40,000 to $50,000 below market value to a buyer represented by the same firm.

Recently, my parents received a solicitation from the same realty firm touting “We Have Buyers” and promising a quick sale. It is a postcard. So, through dual-agency representation, this solicitation translates to another off-market, under-value home sale happening solely within that company. Is that a suitable interpretation?

Answer: Yes, you are correct. In all fairness, well-informed home sellers might elect a home sale without the benefit of the marketplace. Privacy has its price. For example, an occupant might be ill or famous. There are legitimate reasons. The result is discouraging heavy foot traffic. However, these are rare circumstances. Most home sellers would not have sold in-house or off the multiple listing service (aka off-MLS) if they knew it would cost them tens or hundreds of thousands of dollars.

Off-MLS listings, aka “pocket listings,” “in-house listings” and “whisper listings,” have been the topic of many of my columns. I reached back in time for you. Here is an excerpt from one of my 2014 Marketwise columns on the off-MLS epidemic (that ran twice) for the Bay Area News Group’s The Mercury News and East Bay Times:

“In Santa Clara County, the heart of Silicon Valley technology, the local Multiple Listing Service has been painstakingly dredging up the statical rising waves of listings that were withheld from the 15,000 members of the MLS. In 2012 there were 2,700 off-MLS residential transactions that had a median selling price of $64,000 lower than MLS sales. In 2013, the off-MLS wave grew to a chart-topping 3,600 which accounted for a $105,000 lower median selling price compared to MLS sales.

It’s rogue listing agents, not rogue waves, that cause these massive losses. Real estate attorneys have always had cases of sellers selling low and “in-house” but now the “harbor police” are keeping an eye on this issue as well. Like a tsunami, indiscernible on the surface, once the massive wave of litigation strikes, it will be “all hands on deck” to defend listing agents selling off-MLS while practicing dual agency because their navigation on the surface is usually — indefensible.”  (The 2014 column was so talked about it was published twice on April 6 and October 26.)

That example was in Santa Clara County (aka Santa Clara Valley/Silicon Valley), just one of 58 California counties. According to the California Association of Realtors, in December 2012 the median price of an existing detached single-family home in the San Francisco Bay Area was $513,090. In December 2024, it was $1,182,000. Present-day off-MLS losses are substantial.

It gets worse. Many agents misdirect older adults into an off-MLS, in-house, dual-agency home sale. The resulting loss in net proceeds could be deemed financial elder abuse. As well it should be.

For Housing Market Data in your area, visit my webpage for trends here. Do you have questions about home buying or selling? Full-service Realtor Pat Kapowich is a Certified Real Estate Brokerage Manager, Certified Trust and Probate Specialist and career-long consumer protection advocate. He is based in his hometown of Sunnyvale, California. Office: 408-245-7700; Broker# 00979413 [email protected]