{"id":72509,"date":"2021-05-03T06:57:04","date_gmt":"2021-05-03T13:57:04","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=72509"},"modified":"2025-07-01T05:52:16","modified_gmt":"2025-07-01T12:52:16","slug":"pocket-listings","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/pocket-listings\/","title":{"rendered":"We All Support Fair Housing, So Why Are Pocket Listings Up 67%?"},"content":{"rendered":"

This op-ed was originally published on Inman.com<\/a>.\u00a0<\/em>
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Here\u2019s What To Do About It<\/span><\/h2>\n

It turns out you can put a number on whether the housing market has gotten more or less fair to people of color; it has gotten much less fair. In a November 2019 fair-housing initiative, the National Association of Realtors moved to ban so-called pocketing listings, where real estate agents tell only a select group of buyers about a home for sale. But since then, the number of homes sold without being marketed to the public has increased 67%, from 2.4% to 4.0%, and may still get worse; the rate has risen every month in 2021.
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In Some Markets, 10% of Listings Are Pocketed<\/b><\/h4>\n

In markets with a long history of exclusive neighborhoods, like Chicago, or markets where one brokerage has significant share, like Minneapolis or Columbus, the largest brokerages are pocketing more than 10% of their listings. One in ten homes may not sound so bad, but the problem is that the homes being sold in secret are often the ones everybody wants, often in mostly white neighborhoods.\u00a0<\/span><\/p>\n

Who\u2019s Excluded? People of Color<\/b><\/h4>\n

And which buyers are excluded?<\/span> Study<\/span><\/a> after<\/span> study<\/span><\/a> after<\/span> study<\/span><\/a> shows these excluded buyers are disproportionately people of color. This is why marketing every listing to the public isn\u2019t just one way to make housing more fair. It is, according to housing scholars, <\/span>the first principle of a fair market<\/span><\/a>.\u00a0<\/span><\/p>\n

An Open Market is Just \u201cThe Way We Do Business\u201d\u00a0<\/b><\/h4>\n

In the most <\/span>comprehensive review of U.S. real estate practices in this century<\/span><\/a>, a researcher spent a year in Houston attending 50 open-houses, following ten real estate agents and observing 125 encounters between agents and their clients. She cited a Black agent\u2019s dismay that anyone would bypass marketing a listing in Houston\u2019s Multiple Listing Service (MLS):<\/span><\/p>\n

\u201cI don\u2019t understand why [other real estate agents] would do that. And I\u2019ll tell you why. MLS\u2014everybody can see it. Every agent can see it. That\u2019s like our go-to guide. If there\u2019s a good point of properties listed on MLS, any property you want is there. And that\u2019s the way we do business.\u201d<\/span><\/i><\/p>\n

Then the researcher explained pocket listings\u2019 impact on minority home-buyers:<\/span><\/p>\n

Pocket listings have the consequence… of excluding most of the general public from access to a for-sale home advertised only through informal, network-based means. For white real estate agents, whose social networks were predominantly white, this meant that minority home buyers often never knew a pocket-listing home was available.<\/span><\/i><\/p>\n

It\u2019s Hard to Fight Fair When Competition is Fierce<\/b><\/h4>\n

The increase in pocket listings isn\u2019t because brokerages are opposed to people of color buying homes. After a year of protests, many made public commitments to racial justice. But with the number of homes for sale down 47% from last year, it\u2019s just too lucrative to pocket a listing. When an agent sells a home without marketing it to the public, it helps the brokerage recruit new customers with the promise of exclusive access to listings. And on that specific listing, the brokerage also gets a shot at two fees instead of one, by representing both the buyer and the seller in the same sale.<\/span><\/p>\n

Even as the New York Times reported last month that <\/span>unequal access to housing is the foundation for unequal education and economic opportunity<\/span><\/a>, the Wall Street Journal noted the next day that there are now <\/span>more real estate agents than homes for sale<\/span><\/a> in America. When competition gets this fierce, among agents and among homebuyers, fairness is often the first casualty.<\/span><\/p>\n

Just consider as one example a home listed in Dallas by the brokerage I work for, Redfin. It got 154 showings and 32 offers. Redfin would\u2019ve dearly loved to have marketed that listing only to buyers represented by Redfin agents, as it would\u2019ve given buyers a powerful reason to hire a Redfin agent. The listing still would\u2019ve gotten an offer, albeit at a lower price for the client we\u2019d originally been hired to help. But the money that the seller would\u2019ve lost is minor compared to the cumulative impact on society when only a tiny fraction of the market sees that a home is for sale.<\/span><\/p>\n

What We As An Industry Need to Do Now<\/b><\/h4>\n

To ensure that buyers of every color and creed have equal access to every home for sale, we need help from the National Association of Realtors, the local MLSs that brokers use to share data, and from other brokerages:<\/span><\/p>\n