What Is a Pocket Listing?

By 

Michael Yessis

Updated 

March 2nd, 2021

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Purpose of a pocket listing | Market for a pocket listing | Pocket listing trendline | Concerns about pocket listings | Pushback against pocket listings | Future of pocket listings | Finding pocket listings 

Pocket listing is popular shorthand for a house or property for sale that's withheld from public listing channels.

Pocket listings aren't included alongside other active properties on the Multiple Listing Service (MLS), the database of homes for sale used by real estate professionals and marketplaces.[1]

Nor are pocket listings shared widely among real estate agents.

A buyer or agent typically learns about a pocket listing directly from a seller or another agent who knows about it and then reveals it to other parties.

Experienced agents with wide networks are generally better sourced about pocket listings than novice agents.

» NEED AN EXPERIENCED AGENT? Connect with a top-rated realtor in your area.

The purpose of a pocket listing

A seller who chooses to use a pocket listing often has one of these interests or goals:

A pocket listing can protect a seller's privacy

Celebrities, politicians, and others who want to keep a low public profile have traditionally been pocket listing power users.

Pocket listings minimize publicity, foot traffic, and curiosity seekers who may be more interested in gawking at a celebrity's taste in a home than buying a celebrity's home.

Sometimes a divorce, a financial hardship, or another life event the seller doesn't want publicized drives the use of a pocket listing.

🖊️ Other names for pocket listings

  • Hip-pocket listings
  • Private listings
  • Off-market listings
  • Quiet listings
  • Off-MLS listings
  • Whisper listings

A potential buyer has already expressed interest

Why market a property widely when you already know a buyer and aren't interested in dealing with multiple bidders?

It's not uncommon, for instance, for a buyer to negotiate with their neighbor to have first dibs on the neighbor's house if and when they should ever sell, so the buyer can have a family member move in next door.

It's a seller's rental property

And the seller doesn't want the tenants to know the house is for sale.

A pocket listing allows sellers to test the market

Sellers can use pocket listings to evaluate their asking price before potential inclusion on the Multiple Listing Service (MLS).

Testing the market can be valuable because:

  • Sellers who initially overprice their property on the MLS may need to make multiple price reductions. Those reductions are public and, to many potential buyers, they're a red flag.
  • A high number of days on the market can make a property stale. Potential buyers could become leery, wondering if something's wrong with the property that's keeping buyers away.

🏠 What's a typical amount of days on the market for a house?

  • In January 2021, the national average for days on the market was 76, down 11% year over year, according to Realtor.com.
  • In hot markets, the average days on market is much lower. 
  • In very hot markets, houses can sell within hours.

Because these interests and goals are often priorities for sellers using pocket listings, many benefits of a traditional listing — mass exposure, multiple bidders, potential foot-traffic — are almost irrelevant.

If you're a seller considering a pocket listing, you'd be well served with an experienced agent who can evaluate if it's the best path for you.

» FIND AN EXPERIENCED AGENT: Connect with a top-rated realtor in your area.

The market for a pocket listing

It's smaller than the market for a traditional active listing because pocket listings aren't on the Multiple Listing Service (MLS) where they would be visible to the general public.

» READ: What Does Active Mean in Real Estate?

The market's also smaller because homes in pocket listings are relatively more expensive. Fewer people can afford them.

That's not a problem, though, if a seller believes they can reach deep-pocketed potential buyers via word of mouth or other contacts.

The trendline for pocket listings

In recent years, pocket listings grew in popularity and became a significant part of the overall market.

📈 According to a 2019 report, 10% of sellers found buyers without listing their homes on the MLS.[2]

📈 A greater percentage of homes were sold off market in San Francisco (20%) and Los Angeles (30%), according to a 2018 Compass report.[3]

Upcoming reports on pocket listings and off-market listings could show a decline, however, due to recent actions surrounding the practice.

The concerns around pocket listings

Concerns about pocket listings revolve around:

Fairness

Pocket listings aren't equitable. A buyer doesn't have a fair opportunity to buy a house if a buyer doesn't know a house is for sale.

Restricting the visibility of a property to a subset of buyers may also violate fair housing and anti-discrimination laws.

Dual listing potential

If the seller's agent brings in a buyer, there's potential for dual agency where a single agent represents both the buyer and seller. It's then unclear whose interests the agent really represents.

» READ: Everything you need to know about dual agency.

At best, the situation poses an ethical problem.

At worst, it's illegal. Alaska, Colorado, Florida, Kansas, Oklahoma, Texas, Vermont, and Wyoming have all banned dual agency, as of November 2020.[4]

Market transparency

Private transactions based on pocket listings hinder efforts to evaluate what homes are selling for in a local market. That lack of market transparency can affect property values and other home purchases.

👉 Here's why: Appraisers evaluate a home's value based in large part on comps — comparable sales in the local market.

Not knowing all the comps can create a gap in knowledge that affects other buyers and sellers. Nobody really knows if they're getting a fair market price.

The National Association of Realtors has responded by regulating pocket listings among its members.

The pushback against pocket listings

The National Association of Realtors (NAR) effectively banned pocket listings among its more than 1.4 million members in May 2020.

The reasoning for the National Association of Realtors' pocket listings ban

  • The National Association of Realtors (NAR) says: "Brokers and MLSs from across the country asked NAR to consider policy that will reinforce the consumer benefits of cooperation. The MLS creates an efficient marketplace and reinforces the pro-competitive, pro-consumer benefits that REALTORS® have long sought to support."
  • In short, NAR believes consumers benefit from more transparency.

NAR's policy requires real estate brokers to submit a listing to the Multiple Listing Service (MLS) database within one business day of marketing a property to the public.[5]

This NAR policy, however, doesn't mean pocket listings are illegal or will be going away.

The future of pocket listings

Only agents who belong to the National Association of Realtors (NAR) — more than 1.4 million[6] of an estimated more than 2 million agents in the U.S.[7] — must abide by the policy governing pocket listings.

NAR also okayed "office exclusive" listings, which allow a listing to be shared "between the brokers and licensees affiliated with the listing brokerage"[8] without being listed on the Multiple Listing Service.

Legal efforts to overturn NAR's policy have thus far failed.

How do you find pocket listings?

It's often who you know, which is why an experienced agent with a wide network can sometimes help clients learn about pocket listings.

» NEED AN AGENT? Connect with a top-rated realtor in your area.

Other ways to find pocket listings include:

Coming soon listings

Coming soon listings provide a window into homes that aren't yet listed on the MLS, yet are available to the public on the Multiple Listing Service (MLS).

Coming soon listings can be found on Redfin, Zillow, and other real estate marketplaces.

Private listing networks

The Property Listing Service, HomeQT, and Pocket Deed are among the marketplaces that claim to surface pocket listings and other off-MLS listings.

ARTICLE SOURCES
[1]

National Association of Realtors. "Multiple Listing Service (MLS): What Is It." Accessed March 1, 2021.

[2]

National Association of Realtors. "2019 Home Buyers and Sellers Generational Trends Report." Accessed March 1, 2021.

[3]

Compass. "Pacific Union International Launches Private View™." Accessed March 1, 2021.

[4]

Clever. "Everything you need to know about dual agency." Accessed March 1, 2021.

[5]

National Association of Realtors. "Multiple Listing Service (MLS): What Is It." Accessed March 1, 2021.

[6]

National Association of Realtors. "Monthly Membership Report." Accessed March 1, 2021.

[8]

National Association of Realtors. "MLS Clear Cooperation Policy." Accessed March 1, 2021.

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