While the rise of pocket listings — when a residential property is put up for sale without being placed on the Multiple Listing Service — are tough to track, one local broker said it should concern anyone who is looking to buy or sell a home in the near future.

Multiple studies estimate pocket listings make up small portions of the overall sales volume across the country (well under 10 percent) though local observers note an upward trend. These pocket listings have divided the residential real estate world and its major power brokers, including Zillow and Compass, which has led to multiple lawsuits. Some tout its benefits — such as privacy and testing the market before publicly listing — while others say it lacks transparency and can skew market statistics.

Tim Kelly Kiernan, managing broker with Realty One Group’s Summerlin office, noted that in 2020 the National Association of Realtors, introduced the Clear Cooperation Policy. The new requirement from the country’s largest trade orgnaization for real estate agents says listing agents should submit a property to the MLS within one business day of marketing it to the public. This means once a home is shared outside the agent’s office, through a public flyer, email blast, social media post, or word of mouth, it usually must be listed on the MLS.

Zillow sued Compass for breaking from NAR rules by using a phased marketing strategy that starts with a property not being publicly listed. In a recent judgment in Zillow’s favor, the company called it “a clear victory not just for Zillow, but for consumers, agents, brokerages and the real estate industry at large. Zillow believes everyone deserves equal access to the same real estate information at the same time.

Redfin recently launched an early access program for buyers with homes that are only listed on their site as well as pre-market listings from Compass, which is billed as “helping sellers test pricing and demand before a broader market debut.”

Kiernan spoke to the Las Vegas Review-Journal about this contentious issue and where the overall residential real estate market is headed, including people selling homes without licensed real estate agents and if a mortgage rate drop is on the horizon. This conversation has been edited for clarity.

Q: What are pocket listings, and why do you think they’re on the rise?

A: There are several definitions depending on who you ask. To keep it simple it is a property that is “for sale” but not publicly marketing on the MLS system or any outside portals. There are valid reasons for a pocket listing such as the sellers are a celebrity, law enforcement or a public figure.

What this rise means is that buyers will not be aware of certain homes that are for sale. It removes transparency of certain important factors like days on market and price reductions. It reduces the buyer’s negotiating power and limits the buyer being able to compare to other similar homes that are on MLS. But the pocket listing is not on MLS.

Q: Could we see a big shift in how homes are bought and sold in the next few years?

A: My advice to buyers is to be careful. Some buyers are wanting to represent themselves in the real estate transaction. I feel that is a big mistake. Kind of like representing yourself in a divorce. The buyers need an experienced, competent and knowledgeble agent more than ever now to negotiate price, terms, contingencies, oversee the mortgage process and so much more.

Q: What is the biggest misconception out there right now regarding the residential real estate market?

A: Buyers are waiting on [mortgage] rates to drop. But rates have been in the 6 percent for almost four years now. I don’t see a major rate drop anytime soon. The misconception for buyers when rates drop, they celebrate, but in reality that opens up more competition for the house they want and all those buyers on the sidelines jump back into the market. In some cases it can cause an increase in the price of the house. An other misconception is that if inventory increases, that means sellers will lower their asking price. That is not the case typically.

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