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Whisper listings, made directly to select customers

In today’s tight housing market, buyers are furiously competing for a limited number of houses for sale. Thousands of Homes Are Reserved for Certain Buyers ‘Whisper listings,’ made directly to select customers, are growing at a time when housing inventory is near record lows

Real-estate agents are selling more homes to select customers while bypassing the public market, a move that squeezes supply tighter for many buyers when inventory is already near record lows.

In the vast majority of transactions, an agent lists a home for sale on a local database and markets the property widely to drum up interest and get the best price. But in certain cases, a broker will show an unlisted property to a small circle of potential buyers more exclusively, often in hope of getting a deal done quickly.

These private sales are known as pocket listings, or whisper listings. They have been around for many years. But they are on the rise now even though the National Association of Realtors adopted a rule last year aimed at discouraging their use following complaints from some of its members.

The new NAR policy requires agents to add listings to their local database within a business day of publicly advertising the listing. But there is a notable exemption: Listings can still be kept off the database if they are only shared within one brokerage, called an “office exclusive.”

Pocket listings accounted for 3% of sales on average in the year ended in March, up from 2.6% of sales in the year ended in March 2020 and 2.5% in the year ended in March 2019, according to an analysis by brokerage Redfin Corp. That 3% represents roughly 169,000 homes a year sold through this sometimes controversial practice.

Proponents say pocket listings offer a preferred option for sellers who want more privacy, or worry about letting strangers or other individuals into their homes.

“A property listing is as unique as the home seller, who should have choice in how they position, price and market their home,” said Ryan Schneider, chief executive of real-estate brokerage giant Realogy Holdings Corp.

In today’s housing market, buyers are furiously competing for a limited number of houses for sale. With the mortgage-finance company Freddie Mac estimating that the housing market is nearly four million homes short of what is needed to meet buyer demand, some brokers say that pocket listings are making a bad situation worse.

Critics say they exclude buyers from viewing all available properties and can keep sellers from getting the highest price for their home.

“There’s no rationale for, ‘I’m going to show it to one group of buyers but not another group of buyers,’” said Glenn Kelman, Redfin’s CEO, who told his agents to stop using pocket listings in 2018.

Pocket listings traditionally have been more widely used in high-end markets, where celebrity sellers might not want their homes advertised because of privacy concerns. But Redfin’s analysis showed an increase in pocket listings in many markets around the country.

In Des Moines, Iowa, for example, Redfin estimated that 5.4% of sales were likely done without being publicly listed in the year ended in March, up from 3.1% two years earlier. In Tampa, Fla., the proportion of estimated pocket listings rose to 6.1%, from 4.4% two years earlier, Redfin said.

Pocket listings persist in part because they benefit big brokerages, which can shop listings in-house and advertise to potential clients that they have properties that aren’t available anywhere else.

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