Is there a difference between an exclusive listing and a pocket listing?

The real estate industry has always been interested in offering consumer services that meet the needs and wants of the buyer while providing extensive value through experience, knowledge, and protection. The use of exclusive listings, more accurately referred to as office-exclusive listings, is an answer to a desire of the marketplace to have the option to keep seller information private, control the flow of consumers’ access to the property, or other valid reasons. Something to consider, though, is a misunderstanding between exclusive and pocket listings has led to confusion in the industry and among consumers. Let’s look at the differences between these two terms.

Words Matter

Anyone who tells you words don’t matter will need words to tell you they don’t matter, so these people are not to be trusted. We explain concepts with words, write contracts with terms, and read news and blogs, expecting the words used to communicate an idea based on the words used efficiently. For this reason, let’s clarify what I mean by the terms used in this article.

Exclusive Listing

An exclusive listing, or more accurately “office-exclusive” listing, is a listing a REALTOR^® uses to establish a seller representation agreement between the seller and their brokerage only, which will not be marketed on the MLS^® system to other brokerages. This means that the seller’s listing is not necessarily cooperative with other brokerages, associates, or clients. Still, the agreement may contemplate a cooperating fee for another brokerage that brings a buyer client to a successful transaction. This should not be confused with the current AREA standard form for listing a property on the MLS^® system called the Exclusive Seller Representation Agreement, which communicates to the seller that they cannot record with many brokerages, not that the listing is exclusively marketed within the one brokerage alone.

Pocket Listing

Pocket listings are illegal in Alberta. The only class of license that can legally represent a consumer in the trade of real estate is the brokerage class of license. Yes, the REALTOR^® has a right to trade in real estate; however, that license is only valid when registered to a real estate brokerage, and the REALTOR^® operates on behalf of the brokerage in the brokerage’s relationship with the consumer. For this reason, the brokerage is always listed at the top of representation agreements and never the REALTOR^® themselves. A pocket listing means a listing the REALTOR^® has “in their pocket,” separate from the brokerage. Since the Real Estate Act Rules include marketing and advertising as a trade in real estate, even placing a sign or an online ad without the brokerage’s knowledge is illegal on the part of the licensee.

Services and representation offered to consumers must be with the knowledge and consent of the brokerage with which the REALTOR^® is in association. Handshake-style or “in the back pocket” agreements are illegal.

Advising on the Choice

As mentioned above, in Alberta, pocket listings are not an option open to REALTORS^® or their clients, but both office-exclusive listings and MLS^® system listings are options for consumers, so it is essential to recognize the difference. An MLS^® system listing is openly available for all members in the province to view information, arrange showings of the property, and include in client searches when available. Additionally, MLS^® system listings are published on the national REALTOR.ca site, which gets millions of unique visitors every month, ensuring a wide net cast for buyers worldwide. Although there is no denying the tremendous reach and value of the MLS^® system, there are times when the seller may choose a narrower marketing approach. Health concerns, security issues, and desires for a private marketing path in the case of high-profile individuals are only a few reasons a seller may choose this option, in which case the listing will not gain MLS^® system exposure but instead rely on the direct marketing efforts of the REALTOR^® and their brokerage alone.

Options are great, but the key to ensuring competent representation of a seller in the sale of their property is a transparent explanation of the services offered and areas of difference. The key to bear in mind in any considerations regarding the client is that the brokerage must be aware of the relationship, have all required paperwork in their file, and ensure the activities carried out are always in the registered name of the brokerage.