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Illinois real estate broker license defense attorneysA pocket listing refers to any property a real estate broker holds a signed contract with but does not advertise on a multiple listing system (“MLS”). While pocket listings have a somewhat negative reputation, there are many reasons why a broker and seller might prefer this method to the traditional listing: the property might not be ready to show, the seller might be subject to a listing agreement to only show to qualified buyers, or brokers strategically use pocket listings to increase an aura of exclusivity related to the home. While these are legitimate reasons, brokers would take care to exercise caution when using pocket listings to avoid any perceived unethical conduct.

If you choose to do a pocket listing, it must be in the best interests of the client. Realtors are ethically required to promote and protect their clients, which means a motivation to undertake pocket listings solely because it could result in a higher commission will raise red flags. In recommending a pocket listing to a client, the broker must thoroughly discuss the pros and cons with the seller and ensure the seller understands the benefits that are being waived by not showing the property on the MLS. By not listing on the MLS, the broker decreases marketing opportunities to reach a larger audience of potential buyers, and what is probably most relevant to the seller, may not bring in the highest possible price for the property. Because a broker is both legally and ethically required to act with the seller’s best interest in mind, a seller seeking the most money with the best terms must be fully informed before pursuing a pocket listing.

Pocket listings are not illegal, but they are viewed as an ethically grey area in the real estate business. In deciding to undertake a pocket listing, a broker must take extra steps to ensure the client’s best interests are being met. If a client ultimately feels like the broker did not receive ethical and adequate representation, a broker could face disciplinary action against their license by the Illinois Department of Financial and Professional Regulation. Williams & Nickl has considerable experience representing real estate brokers and defending their licenses before the IDFPR. If any troubles arise, please contact us for efficient and effective representation.

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