There is a phrase thrown around in real estate circles that is often unfamiliar to those outside the business: pocket listing.
What’s a pocket listing? A pocket listing occurs when a seller wants to sell their home, but instead of the real estate agent listing it on the multiple listing services (MLS), the agent withholds the listing from public circulation and informs potential buyers via word of mouth.
So what does that mean for home buyers?
There are several different options when deciding how to list your home. You can start with a pocket listing for a specified period of time, and if no contracts arise within that time, you can then have your agent list it on the MLS.
A second option is to do the reverse; list on the MLS for a specified period of time then remove it and switch to a pocket listing. The third option is to keep the home as a pocket listing or listed on the MLS until the home sells.
Are Pocket Listings A Good Idea?
The short answer is “it depends.”
In some metropolitan areas, more than 30 percent of listings are being withheld, according to INMAN News. In others, the number is much lower. It will also depend on the listing price of the home. Many Hollywood types use pocket listings, as they offer more privacy than a general listing on the MLS. But even if your home isn’t selling for millions of dollars, privacy may be a concern for you. Whether you are selling due to financial hardship, want to avoid nosy neighbors or have other reasons for wanting a low-profile sale, a pocket listing may be just what you’re looking for. Additionally, when the home is on a pocket listing as opposed to the MLS, you have a more relaxed sale. This is due to the fact that you don’t have to keep your home in showing condition 24/7, which can be a huge hassle for busy families.
The other side of this coin is that your property may have less exposure to qualified buyers which can result in a lower sales price, and a reduction in the opportunity for a bidding war. If your number one priority is getting top dollar for your home, then a pocket listing may not be your best option.
Real estate agent commissions are always negotiable. One way you can attempt to make up for lost profit on the home is to negotiate a lower commission. If the agent has to host fewer showings, or represents both the buyer and the seller, it may be a win-win. But be cautious: if an agent represents both the buyer and seller, it becomes more difficult for the agent to represent the best interests of both clients.
As the popularity and effectiveness of a pocket listing versus using the MLS can vary greatly by area and price, consult with an experienced real estate agent on what will work best for your home. Ask the agent what marketing strategy she would propose and what options you have to alter that strategy if it’s not working. It’s also a good idea to feel out a few different agents. There are a few reasons for this:
- If you’re a potential seller and one agent tells you that pocket listings are uncommon and another tells you that’s the only way sellers do it in your area, then you know one of them is either uninformed or has intentions that may not be in line with your interests. By doing a little research and asking a lot of questions you can find an experienced agent who will know the best strategies for your area.
- You will be working with this agent hand-in-hand on one of the biggest financial transactions of your life. You need to find someone that you trust and who you think you will enjoy working with on a daily basis.
- If you’re a buyer and an agent is only showing you pocket listings, ask them about their intentions and whether they’ve also reviewed the MLS to ensure you are seeing every home within your specifications. If the reverse is true, ask your agent if they’re aware of any pocket listings in the area. By viewing all options you have the greatest chance of finding the best home to meet your needs.
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Photo Courtesy of Patty Y 1000