“Since the pandemic, real estate professionals have found ways around the policy,” said Matt Lavinder, president of New Again Houses, a home-flipping company. Brokers are using WhatsApp, Discord and Telegram chats to privately share listings as well, he said. “This has become a secondary market.”
Pocket listings exist in a gray space between legal and illegal, said Andrew M. Lieb, an attorney and the founder of the Lieb School, a licensed New York State real estate school. The U.S. Department of Justice has argued that the practice could violate antitrust laws. They are also potentially discriminatory.
“It could be argued that they violate the Fair Housing Act,” Mr. Lieb said, because they could contribute to disparate impact discrimination, a phenomenon in which a seemingly neutral policy is disproportionately unfair to one specific group. While no such case has yet to be brought to court, there is precedent: The National Fair Housing Alliance sued Redfin in October 2020 for setting minimum price requirements on the homes it lists, a practice the alliance alleges discriminates against minority communities. According to Morgan Williams, the alliance’s general counsel, both parties have agreed to stay further litigation pending active settlement negotiations. In the meantime, Redfin has yet to change its minimum-price policy.
“By analogy, this is the same concept,” Mr. Lieb said.
However, Glenn Kelman, the chief executive of Redfin, has been a vocal detractor of pocket listings, referring to them as “a relic from the real estate industry’s old history of perpetuating segregation” in a May 2021 opinion piece in Inman, a trade publication. And the national association’s loophole that allows for brokerage-exclusive listings, he said, has unintentionally created monopolies among bigger brokerages.
Not all brokers agree that pocket listings represent unfair competition or are damaging to minority groups.
“I let all my agents know that as long as you’re not advertising the property to the public, you’re good to go,” said Sharelle Rosado, a broker in Tampa. At her brokerage Allure Realty, she said the use of pocket listings has increased 40 percent since the start of the pandemic. She leans on connections with both sellers and developers to build her pipeline of potential off-market sales. They are particularly helpful, she said, when working with high-income buyers looking for homes in the $10 million range, where inventory has always been tight.
“A lot of people are not for pocket listings, but it helps our clients, and it’s beneficial to both sides,” she said. “And I don’t have to split the commission.”