Texas real estate agents call it serving the customer.
Their primary trade association says it makes them “dirty players.”
That’s the standoff that has yet to be sorted out in the wake of the National Association of Realtors campaign to ban members of its local chapters from marketing homes not entered into their MLS. Prohibition on such deals — known as “pocket listings” — flies in the face of longstanding business practices in Texas, where the under-the-radar deals are often preferred as a way to avoid reassessments that hike property tax bills.
Many high-end Texas sellers — and buyers — want to keep their home prices out of public view for tax purposes, since property taxes are so high in a state that eschews income tax. And the concern is not unfounded. In May, the Austin Board of Realtors sent a cease-and-desist letter to the Hays Central Appraisal District, citing unauthorized use of its MLS data to determine home values.
The policy NAR is pushing is simple: Any broker must submit a listing to the MLS within one business day of marketing the property through public-facing websites, email blasts, multi-brokerage listing sharing networks, social media or other methods.
Since the MLS is public, the so-called “Clear Cooperation Policy” is supposed to ensure that all homes for sale are accessible to all other brokers and potential buyers, according to NAR.
Collin County Association of Realtors’ Shana Acquisto
“It was basically designed to prevent unfair advantages and keep everybody on the same playing field, and keep consumers with the most accurate information,” said Shana Acquisto, incoming president of the Collin County Association of Realtors, a North Texas affiliate of NAR.
Capturing all sales in the MLS also benefits NAR, of course, because it improves the quality of the data that the association collects for its reports
But Texas brokers and agents — some of whom would only comment under the condition of anonymity for fear of what they said could be retaliation from NAR — complain that the policy unfairly restricts the services they can provide sellers who don’t want their homes listed in the MLS.
“With the new policy, you also cannot market it” as a pocket listing, one broker said. “As soon as you market it, it has to go into MLS.”
Agents are allowed to share listings within their brokerage without entering it into the MLS, but realtors complain that this is unfair to smaller shops.
“It limits the people who are not part of a big office. You’re being discriminatory against a small office,” said another agent who also wished to remain anonymous. “Everybody’s just trying to do the best job possible, and they’re making it harder.”
Brokers caught marketing a home not entered in the MLS can face fines and other penalties.
NAR left it up to its local affiliates to interpret and police the rule, which makes enforcement uneven, especially in Texas. The Austin Board of Realtors doesn’t even acknowledge the rule, according to some brokers. Meanwhile, in Dallas, the fines start around $1,000 and can go up to $2,500 — and after a third offense, a broker can lose their license.
Off-market deals are not unique to Texas, but they are certainly more common in the Lone Star State than elsewhere. According to one Dallas broker, the proportion of homes sold off the market in the DFW area is around 30 percent, even as public listings have spiked. A 2021 report from Redfin put the national figure at only 4 present.
While it’s mostly sellers of the most expensive homes who want to keep their listings out of public view, even homeowners at the other end of the market may want to sell off-market, according to Dallas-area realtor and lawyer Chandler Crouch.
Chandler Crouch
“I have clients that have a house they want to sell that is not in good shape and no owner or occupant is going to buy it, so they have to sell it to an investor,” Crouch said. “Some investors will pay significantly more for a property not listed on the MLS.”
In that case, the NAR policy can actually pressure an agent to go against their legal obligations to the seller.
“The obligation that I have as a fiduciary to my client is to put their interests first — that should be what our system relies on,” said Crouch. “And if I’m not doing that, then I’m breaking the law.”
Acquisto speculated that much of the local pushback against the policy is driven by what she called “dirty players” who get a power trip from lording their access to off-market deals over other brokers.
“I think how it’s affected is the ‘dirty players,’ they don’t like it. Because they kind of have control and like to be the one everyone has to go to because they have a secret listing,” she said. “So it’s kind of a power move, I guess.”
But some Texas brokers see the policy as NAR putting its own interests over that of the sellers its members are supposed to serve.
“Is your angle to do what is in the best interest of the property owner or what’s in the best interest of the Board of Realtors?” Crouch asked.
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