Mercedes Shaffer, Realtor

You’ve probably heard of pocket listings or off-market listings. You may have even bought or sold property this way. A significant percentage of investment real estate transactions never “go to market.” But what’s behind this, and how does it work?

The Clear Cooperation Policy: Restrictions and Fines

Due to the Clear Cooperation Policy, real estate agents can promote off-market listings to their private networks of buyers or investors through one-to-one communication, like emails and phone calls. However, they are prohibited from advertising these listings on public platforms such as websites, Instagram, Facebook, YouTube, or even private platforms where the listing could reach a select broader audience en masse.

This restriction is a hotly debated topic in the real estate industry, with many agents advocating for policy changes to better accommodate sellers who value discretion. Agents who are caught violating the Clear Cooperation Policy in California can face fines of up to $5,000 per infraction, creating a significant deterrent for those who might otherwise market off-market properties more broadly.

Discretion in Marketing

Various platforms on the internet allow agents to build private online networks where pocket listings can be shared with a carefully vetted audience. For luxury agents, this is especially relevant when representing high-profile clients or celebrities who prefer their homes to remain off platforms like Zillow or Redfin, avoiding public exposure.

For investment property sellers, discretion is equally crucial when they want to keep their tenants unaware of the sale. If tenants learn a property is for sale, it can create unnecessary anxiety, potentially resulting in higher tenant turnover or reluctance to renew leases. This uncertainty can impact rental income and, in turn, the perceived value of the property to potential buyers.

A Divided Industry

The Clear Cooperation Policy, implemented by the National Association of Realtors (NAR), requires agents to list a property on the Multiple Listing Service (MLS) to market it broadly, ensuring all buyers have equal access. Proponents of the policy argue it levels the playing field, but critics say the policy limits agents’ ability to market these properties in a targeted and private way, which can slow the sales process and reduce the pool of potential buyers.

Luxury real estate is getting a lot of attention in mainstream media due to celebrity agents being very vocal on the topic. Jason Oppenheim, President of The Oppenheim Group and featured on Netflix’s Selling Sunset and Selling the OC, has said, “The Clear Cooperation Policy creates unnecessary hurdles for sellers who prioritize privacy.” Similarly, Mauricio Umansky, founder of The Agency and star of Netflix’s Buying Beverly Hills, has expressed concerns, explaining how the policy prevents agents from effectively serving clients in markets where confidentiality is critical. Both highlight how the policy impacts the luxury real estate market, where off-market, or “pocket,” listings are a common and valuable strategy.

Beyond the Luxury Market

While much of the debate centers on luxury homes, the Clear Cooperation Policy also affects sellers of investment properties, like apartment buildings. These sellers often prefer to avoid alarming tenants or alerting competitors, making discreet marketing essential.

The Bottom Line

While the debate over the Clear Cooperation Policy continues and agents push for changes, there are still ways to navigate its limitations. Agents can share off-market opportunities directly with clients through one-to-one communication, such as emails and phone calls, though this process is more tedious and less efficient than creating private online investor networks where off-market deals can be shared among vetted buyers.

Despite these challenges, understanding how the policy impacts sellers and buyers alike underscores the importance of strong connections in the real estate industry. A trusted network can often open doors to opportunities that might otherwise remain inaccessible.

Mercedes Shaffer is a multifamily real estate agent with REAL Broker. If f you have questions about buying, selling or doing a 1031 exchange, her team serves LA and Orange County and can be reached at 714.330.9999, InvestingInTheOC@gmail.com, or you can visit their website at InvestingInTheOC.com  DRE 02114448