Yes, the old adage is still true: It’s all about who you know.
If you’re looking for a home that’s a touch more exclusive, you need to know what a pocket listing is.
A pocket listing is a real estate listing for a home that is technically on the market. However, in a pocket listing, the selling agent has not entered the property into a multiple listing service (MLS). Instead, the agent keeps the listing “in their pocket” and only tells a few of their colleagues about it.
This sort of “close to the chest” property transfer is relatively rare. In 2013, The Washington Post reported that up to 20% of American home sales were pocket listings.
FYI: Pocket listings are sometimes also called “quiet listings” or “exclusive listings.”
Why do sellers use pocket listings?
Typically, home sellers who are interested in pocket listings use them for two main reasons: privacy and efficiency. They don’t want to bother with listing services and the typical home-selling process.
When a seller is a celebrity or other well-known person, they often have a great need for privacy. They typically prefer that only serious buyers view their home, instead of curious strangers looking for a chance to poke around.
Maybe a seller isn’t famous, but they’re looking for privacy regardless. Perhaps they’ve just gone through a divorce and would prefer that not everyone know they’re selling their house. Or maybe the seller has accepted a job in a new city and don’t need their current coworkers knowing they’re moving. Whatever the reasons, keeping a listing on the down low—in an agent’s pocket—can be the answer.
Sellers might also use a pocket listing as a marketing strategy. After all, many buyers are drawn to the exclusivity of a pocket sale.
Finally, as pocket listings typically only involve one agent, there are lower overall commissions to pay.
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How to Find Pocket Listings
Understanding how to find pocket listings really is all about who you know.
To increase your chances of finding one, you need to pick a Realtor with a good reputation and a great network. Services that have a national network (like Clever) are often a good place to start.
This is because many of these agents have extensive working relationships and are committed to finding their clients the perfect property.
Whichever Realtor you choose, ensure that they are a member of the National Association of Realtors. This way, it is more likely that their professional network is bona fide.
Speaking of professional networks, there are actually entire services dedicated to pocket listings.
The Pocket Listing Service
The Pocket Listing Service (PLS) is a private membership site from Realtors-to-the-stars Chris Dyson, Mauricio Umansky, James Harris, and David Parnes.
The name plays on the multiple listing service that so many Realtors use to discover listings. Unlike the MLS, though, the PLS posted $1.4 billion in listed assets in their first three months.
The PLS isn’t open to the public, but rather is an exclusive group of Realtors who would share their pocket listings with each other. One of its core beliefs is “you are only as good as your list.”
Pros of Pocket Listing for Buyers
Pocket listings for buyers can be less competitive, as there are simply fewer buyers involved.
You also might be able to snag a great deal on a house that has been sitting around on the market for a while due to a lack of visibility.
Cons of Pocket Listings for Buyers
Since pocket listings are all about who you know, a buyer who doesn’t have many connections in the real estate industry might never hear about the listing in the first place—even if they’re fully qualified to purchase the home.
This could become a bigger issue if pocket listings become even more common.
Pros of Pocket Listings for Sellers
As stated, the No. 1 advantage of a pocket listing for sellers is privacy. There are many reasons that a seller might prefer the world does not know their home is on the market—even if they’re not a prominent community figure.
Whatever those reasons are, a pocket listing guarantees privacy and protection from the typical real estate process of showings and open houses.
Risks of Pocket Listings for Sellers
When you sell your home using a pocket listing, the pool of potential buyers is dramatically reduced.
While you might get a good price for the listing, it is unclear whether that truly would be the best price. This is because there is no competitive edge in a pocket listing—only the feeling of exclusivity.
Are pocket listings illegal?
No. Not at all.
However, there is one thing to keep in mind: Article 1 of the National Association of Realtors Code of Ethics requires that all agents “promote and protect the best interests of the client.” State laws typically require the same thing.
In summary, a pocket listing might not generate the best price for the seller due to the lack of competition. However, the privacy of the listing often outweighs that concern. For a Realtor to abide by their Code of Ethics (and state law), they simply need to understand which is more important to their client.
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