Pocket listings are positively overflowing nearly four years after the National Association of Realtors enacted its controversial Clear Cooperation policy to end them, a new Intel analysis shows.

This report is available exclusively to subscribers of Inman Intel, a data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.

The Austin suburb of West Lake Hills is made up largely of newly built luxury houses. The homes along the neighborhood’s leafy streets and rolling hills fetch, on average, around $1.5 million. Many have sprawling footprints and glimmering swimming pools, and the neighborhood — which is outside the city limits of Austin proper — has lower taxes than the central city. 

But in 2023, another unique feature about the homes stands out: Nearly half the property sales in the neighborhood have taken place off market, according to data compiled by Paul Reddam, a broker associate with Homesville Realty Group in Austin. 

“I’m seeing a record amount of private listings,” Reddam told Intel. “Like, it’s a bananas amount.” 

West Lake Hills isn’t alone.

Agents in major markets across the country told Intel they’re noticing similar trends in their markets nearly four years after the National Association of Realtors passed a controversial rule known as the Clear Cooperation Policy in November of 2019. The rule — which states that a listing broker must submit a property to the MLS within one day of publicly marketing it — was meant to cut down on the once-common practice of pocket listings, or privately marketing and selling homes outside the local multiple listing service.

NAR did not respond to a request for comment on this article.

But according to agent accounts in multiple markets, the policy has done little to stem the flow of off-market listings. Instead, they remain commonplace in many areas, and in some cases even increased as the housing market has slowed and mortgage rates climbed. The market has responded to Clear Cooperation, in other words, not by abandoning pocket listings but rather by shifting to under-the-radar tactics.  

The trend isn’t universal — there are some markets where pocket listings have decreased — but it is significant enough to conclude that pocket listings remain a presence in real estate, and are unlikely to go away anytime soon.

A persistent presence 

While finding hard numbers on pocket listings is notoriously hard, the limited national data that is available does not suggest pocket listings have decreased in any meaningful way since the adoption of Clear Cooperation. 

One way to track the practice is to identify homes that were marked as sold on the same day that they were listed on the MLS. According to data that Redfin provided to Intel, in the fourth quarter of 2019 — around the time NAR passed Clear Cooperation — 1.3 percent of home sales were processed the same day they hit the MLS.

By the second quarter of 2023, that number had risen to 2.2 percent. Same-day sales never dipped below 1.5 percent of transactions in any quarter since the policy went into effect.

Chart by Daniel Houston

Local data similarly shows that pocket listings are widespread right now. Austin-based Reddam, for example, has tracked properties listed privately on exclusive MLS-like services such as ones that only allow high-end homes — which he has described as the segment where pocket listings are most common. To calculate the number of pocket listings, he also compared the number of homes sold compared to the number of homes listed publicly on the local MLS — an imperfect, yet somewhat standard method of tracking suspected pocket listings.

In the ritzy Northwest Hills neighborhood in Austin, there have been six private listings and 18 public listings this year, with 25 percent of sales in the neighborhood taking place privately, according to Reddam’s data.

Central Austin has seen 179 private listings and 857 MLS listings, with 17 percent of sales there happening privately. The Lakeway neighborhood, which sits to the east of the city on a bend in the Colorado River, has seen 31 private listings versus 165 public listings, with 16 percent of sales in that neighborhood happening privately.

In Manhattan, one of the nation’s biggest luxury markets, the number of suspected pocket listings has remained relatively stable over the past five years, according to data from Manhattan real estate analytics firm UrbanDigs. 

On the broader market, about 28 percent of transactions in the borough of New York City don’t have an associated listing, according to UrbanDigs, making them likely candidates for pocket listings, with that percentage staying relatively stable over the past five years. 

Source: UrbanDigs

The luxury market, however — comprised of sales worth $4 million and above — has shown a steady decline in the number of likely pocket listings. After hitting a high of 66 percent during the COVID-ravaged housing market of 2020, suspected pocket listings have fallen to 32 percent as of July — still a larger share than that of the broader market, due to the greater desire for privacy among those selling at a higher price point.

Not every market is like Austin. Los Angeles, for example, saw a dramatic drop-off in pocket listings in three of its priciest areas — Downtown, the West Side, and Malibu — but not because of Clear Cooperation. 

According to data from the real estate appraisal and consultancy firm Miller Samuel, 25.3 percent of sales in those neighborhoods took place off-market in the second quarter of 2019, when Clear Cooperation was passed. It dropped off slightly over time, falling to 17.6 percent in the second quarter of 2022, before free-falling to just 4.4 percent during the second quarter of 2023. 

According to Jonathan Miller, CEO of Miller Samuel, that drop off can likely be attributed to the “Mansion Taxpassed by the City of Los Angeles, which led to a huge drop in activity in the luxury market earlier this year.

‘A superhero without powers’ 

Critics have criticized NAR’s policy as ineffective, given that pocket listings are still prominent in nearly every major market. 

In a recent interview ahead of an appearance at the Inman Connect real estate conference in Las Vegas, Redfin Senior Director of Brokerage Operations Joe Rath, whose position puts him in contact with MLSs across the country, said that Clear Cooperation “in its current form promotes the behaviors it was really intending to discourage” due to its many loopholes and is “like a superhero without powers.”

The most problematic loophole, according to Rath, is the one that allows brokerages to market listings internally. Rath said that essentially allows big companies to continue doing pocket listings within their own brokerage network.

Large brokerages such as Compass and Howard Hanna have already launched official exclusive listing programs: Compass Private Exclusives and Howard Hanna’s Find It First. Other brokerages operate on a more informal word-of-mouth basis for off-market listings, agents told Intel. 

Redfin and its CEO, Glenn Kelman, have consistently been the industry’s most prominent voices opposing pocket listings. But on stage at Connect, Rath said Redfin was “strongly considering” deploying an exclusive listings arm because the rest of the industry seems to be ignoring or finding ways around NAR’s regulations. 

“If other brokerages are going to use it, then Redfin may have to use it, too,” he said.  

While Rath may feel the policy is ineffective, others in the industry have criticized it from the other side, describing it as a power grab and taking issue with the underlying objectives. 

In a 2021 interivew with Inman, Coldwell Banker’s Gary Gold — who at the time was with Hilton & Hyland in Beverly Hills — called Clear Cooperation “the most nonsensical, stupid law I’ve ever heard of in my life.” It’s a sentiment that has been shared over the years by a number of prominent voices in real estate.

Gold charged that while the policy’s stated intention is to even the playing field for buyers, what it actually does is make consumers less aware of what’s on the market. 

“The real intention is that the powers that be want to have control over the situation,” Gold said. “They don’t want business being conducted that’s not under their umbrella.”

The legal war on Clear Cooperation  

Clear Cooperation is also facing legal challenges from multiple angles, including the recently revived antitrust lawsuit filed by the private listing service Top Agent Network (TAN), which alleges the policy violates numerous antitrust and unfair competition laws.

TAN’s case had been dismissed by a federal district court in San Francisco in August 2021, which the company subsequently appealed. 

Another suit challenging Clear Cooperation filed in 2020 by the private listing network ThePLS.com was initially tossed in a lower court — a ruling the company appealed and won — and the case is now back in a lower district court. The same appeals court also considered TAN’s appeal and decided the cases were similar enough to both proceed, marking two significant legal challenges to Clear Cooperation. 

“Because the facts of PLS.com are sufficiently analogous to the facts as alleged here, we vacate the district court’s order and remand Top Agent’s claims for reconsideration under PLS.com,” the court wrote in a one-page decision.

The demand remains  

According to agents, pocket listings haven’t gone anywhere largely because the reasons for pocket listings to exist haven’t gone anywhere. 

There will always be sellers who have a public profile and desire privacy, want to wait for a “make me move” price, or don’t want their tenants or family members to know their building is being sold.

“People have been working this model for decades,” Ari Afshar, the founder of the Los Angeles brokerage Voyage told Intel. “It’s not a new business.” 

In San Francisco, Compass luxury agent Alexander Fromm Lurie told Intel he has tracked an uptick in clients of his wanting to keep their home off the MLS for a variety of reasons, including some who hope it will fetch them a higher price. 

“There is a belief in a certain segment of sellers that by offering it off-market they might be able to get a higher price than they would in an on-market debut,” Lurie said. 

But by and large, the biggest chunk of off-market sellers Lurie has worked with throughout the past year are inspired to keep their home off the public market for fear of a full commitment to selling their house in a down market — unless they know for certain that they’re getting a good offer. 

“I was talking to a client two days ago and they said if I come across a buyer for their property: here’s my price,” Lurie said. “I think what it is is they’re like ‘Look, I don’t think we’re going to be able to get our price. I don’t want to go through the whole prep process with you right now, and we don’t want to move out because we don’t think we’re going to get it — but we think there’s like a 10 percent to 20 percent chance we could.” 

“So many people have expressed interest and desire to sell, but they self-select out of the process because they don’t think they’re going to get what they want to get,” he added. 

Lurie says he has seen a notable uptick in off-market listings for properties priced over $1.5 million, but no change in more entry-level priced properties. 

In Austin’s upper-crust neighborhoods, Reddam similarly theorized that many homes that were struggling to attract buyers willing to pay seven figures were “parked” in a private listing until a capable buyer emerged.

“We had a whole lot of homes not able to sell at the numbers they thought they could,” Reddam said. “I think a lot of those homes that couldn’t sell just got parked.”

In New York City — where policy by the Real Estate Board of New York also restricts pocket listings — broker Mihal Gartenberg of Coldwell Banker Warburg shared with Intel an example of just how complicated and pervasive the web of off-market listings can be in the country’s most expensive housing market. 

Just before REBNY put in place its restrictions on off-market listings in 2022, Gartenberg was representing a seller who publicly listed one apartment — Apartment A — while he had plans to renovate and sell another identical, yet unrenovated apartment — Apartment B. While she received multiple offers on Apartment A, she invited those who missed out on the renovated property to similarly bid for Apartment B, and was able to sell the unrenovated apartment before it even officially hit the market. 

The buyer of Apartment A, who lived in the same building, then decided to sell her old apartment, which was purchased by another of Gartenberg’s clients, who themselves had been renting in the same building.

“Where I represented Apartment B, I privately called the agents with interested buyers for Apartment A. When I knew I had buyers interested in Apartment C, I called the seller’s agent with whom she was buying Apartment A and asked for an appointment,” she said.  “It was as convoluted as it sounds. Essentially, one listing led to three sales in the same building.” 

Afshar agreed that the number of pocket listings has increased as rates have risen and homeowners require more convincing to move. 

“People have locked themselves into very low rates and they don’t see a need to move unless life circumstances come into play and so there are just more people who are giving a ‘make me move number’ and if something comes to light, then they’ll transact,” he said. 

According to  Shelton Wilder, who leads the Shelton Wilder Group with Sotheby’s International Realty in West Los Angeles, the demand from some clients — particularly those with a high profile who have a need for privacy — to have their property marketed privately is as strong as ever. 

“What’s been hard is a lot of clients, they might not want their homes on the MLS, but we have to be careful because we want to follow the rules,” said Wilder, who leads the Shelton Wilder Group with Sotheby’s International Realty. “It’s sometimes really hard to explain to clients. They feel like ‘it’s my house, I own the house, we should be able to do whatever.’” 

To avoid violating Clear Cooperation, Wilder said many agents make an effort to market a property internally within their brokerage when a client insists on keeping their property off the MLS. 

“You can really do it within your brokerage,” she said. “We had a large sale last year basically around the water cooler.”

While a small number of agents are able to work within in-house networks like Compass Private Exclusives, the majority of agents who work with off-market properties are marketing them the old-fashioned way, largely through word of mouth — another way to market the properties that does not violate Clear Cooperation because it does not count as marketing a property to the public. 

“It comes back down to the same method people have been doing since day one, which is: Pick up the phone, call your network of agents, see what opportunities are out there,” Afshar said. “Automation has changed so much of the way that we do things, so we forget we were built as an industry on shaking hands and picking up the phone and talking to people, and that’s how deals are getting done right now.” 

It remains unclear what solutions there are to the pocket listings issue, but some in the industry are hoping that technology, rather than regulation, can offer a path forward. Afshar said he hopes a platform emerges that makes it easier for agents to work with non-MLS listings without running astray of the NAR.

“My hope for the marketplace as a whole is there is a platform that does come to life that will be in good standing with the National Association of Realtors to address this exact problem,” he said. “It shouldn’t be this difficult for buyers and sellers to interact when the intention is there on both sides.”

Email Ben Verde

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