According to an article published by Redfin News, pocket listings shot up by 67% in 2021, to comprise around 20% of all real estate listings.
While some buyers and brokers argue that these listings help even out the playing field in today’s seller-oriented market, many real estate agents claim the opposite.
Are you wondering, ”what is a pocket listing?” If so, then keep reading. In this article, we’ll cover all the questions surrounding these home sales including the pros, cons, and legalities.
What is a pocket listing in real estate?
A real estate pocket listing is an off-market listing that doesn’t appear on the MLS. There’s no lawn sign advertising the sale, and all marketing takes place via word-of-mouth or private channels.
That means it’s only available to selected clients. These may include elite clients known only to your realtor, or someone you know who has expressed a keen interest in buying your home.
With pocket listings, a single agent represents both the buyer and the seller.
An example of pocket listing in real estate
Let’s say homeowner A wants to sell their expensive Los Angeles mansion. They know someone who has already expressed an interest in buying it and asked for the first option.
Since homeowner A already has a buyer, there’s no need to market their home actively to the public. Yet, they still need the services of a real estate agent to handle the transaction.
Instead of engaging in a traditional home sale, the homeowner can engage with a real estate agent they trust to sell the property on their behalf.
You don’t need to own a high-end property to undertake an exclusive listing, and you don’t need to work with a real estate agent, either. Selling your home yourself or accepting an offer from a cash buyer without listing it on the MLS are also kinds of pocket listings.
The next thing you need to know is, ”What’s a pocket listing going to do for me?”
What is pocket listing best for?
Pocket listings present several benefits for sellers and buyers. These include:
Pocket listing real estate is a common practice for homeowners and celebrities who want to sell high-end properties via an exclusive listing.
It’s the best way for these homeowners to avoid undue publicity or attention from unqualified buyers who simply want to look around the home.
If you’re going through a divorce or experiencing financial difficulties, you might not want to attract questions from curious community members about why you’re selling your home.
Likewise, if you run your business from home, listing it for sale might create fears that you are leaving the area and cause you to lose clients.
A pocket sale is much more discreet and confidential than advertising your home for sale on the internet.
No open house home showings
Selling your home using a pocket listing is a good way to avoid the stress and hassle of open house viewings. Many homeowners find these occasions intrusive, and they can also present security risks.
Homebuyers aren’t always respectful of your spaces and may traipse mud across your newly-cleaned carpets or pry among your belongings.
An open house event takes several hours to complete. You and your pets will need to vacate your home while it’s underway.
Avoiding wasting time with window shoppers
When you host an open house, anyone can attend, whether they intend to buy your home or not.
With a pocket listing, your real estate agent already knows a pool of potential buyers who’ve expressed an interest in homes like yours. They will actively market the property among these clients, and you’ll typically only need to engage with serious buyers.
Due to the rampant demand for houses in recent years, most real estate agents have increased their lists of buyers wishing to avoid conventional home sales, too.
Testing the waters of real estate in your area
A pocket listing is also a good option for you if you want to achieve above market value for their homes. This practice allows you to gauge if there’s any interest in the property at your asking price, before listing it on the MLS.
You’ll gain a fair idea of what people might pay for your house without the uncertainty of waiting for someone to make an offer.
Cost savings associated with pocket listings
Listing your home privately can help save on the costs associated with selling your home. With these listings, you don’t need to hire a photographer or home stager to portray your home in the best light.
Since realtors don’t incur marketing costs for off-market homes, and they’re representing both the buyer and seller, they may charge a lower commission to manage these sales, too.
Speed up the process
By avoiding the hit-and-miss approach of marketing your home online and hosting home showings, private sales often close faster. You don’t need to wait for buyers to discover your home and express an interest in it, your real estate agent will contact interested parties right away.
There’s less negotiating involved, and most buyers already have the funds available, so you don’t need to wait for the mortgage approval process to conclude.
Avoid your listing going stale
There are plenty of reasons why perfectly good homes don’t sell as fast as others. Yet, many potential buyers think the worst when they see a home listed for a long time.
Likewise, when you list a property and lower the price after the fact, it can raise red flags for potential buyers or cause them to stall making an offer in the hopes of further price reduction.
Pocket listing benefits buyers
Buyers enjoy many of the same benefits as sellers do when they engage in a private home sale. Enhanced privacy, confidentiality, and less competition are the obvious perks, but they also enjoy a more personalized experience.
When a buyer works closely with a real estate agent to find a home that meets their exact criteria, they don’t waste time viewing homes that don’t suit their needs.
What is a pocket listing not so good for?
The MLS is the best way to draw attention to your home if you want to attract as many potential buyers as possible. These listings appear in all the places people search for home sales, like property websites, social media, and real estate brokers’ websites.
According to a press release from the NAR, around 97% of people start their search for a new home online. This mass exposure is the best way to ensure you get the price you want for your home.
There is only a very small pool of buyers available to those who sell their homes privately. This lack of competition means you could achieve a lower price for your home.
Some real estate brokers oppose off-market listings, so you could experience difficulties finding an agent to assist with your pocket listing. With your preferred agent off the cards, finding a reputable, reliable real estate agent can be a long drawn-out process.
Is pocket listing legal?
Although the NAR frowns upon them, pocket listings are legal everywhere in the country. If you want to engage in this practice, you’ll need to work with a real estate agent or a real estate broker instead of a registered Realtor®.
According to the National Association of Realtors’ Clear Cooperation Policy, Realtors® must submit all listings to the MLS within one day of marketing the property publicly. This is to prevent their members from putting their interests above that of the client.
Some people consider pocket listings unethical due to one agent representing both parties. It’s difficult for agents to represent the interests of both parties fairly.
There’s some controversy around off-market sales, too. Fair housing advocates claim these listings promote discrimination and segregation in the real estate marketplace.
By limiting who can or cannot view or buy a home, real estate agents venture into murky legal waters regarding discrimination.
Sell your home faster
When considering your home sale options, it’s vital to consider the question, “What is a pocket listing, and is it best for me?”
Unless you already have a committed buyer, a pocket listing won’t guarantee a quicker sale. If you’re aiming to sell your home fast, you’re probably better off selling your home via the MLS, by yourself, or to a cash investor.
iBuyer.com can assure you of a fair price for your home and a fast sale with a convenient closing date. We will provide you with a home valuation within seconds and put you in touch with qualified and committed buyers.
Enter your home address on our website to see how much your home is worth.