Beginner Investors What Is a Pocket Listing in Real Estate? by Sohel Farwaji September 12, 2019September 12, 2019 by Sohel Farwaji September 12, 2019September 12, 2019 When the time comes to sell a home, the majority of homeowners will select the traditional way of marketing their property – through listings on the open market. Yet, some others will choose to sell their home through pocket listings. Most estimates put these types of listings at just 10% of all national home sales. So, you may be asking yourself, what is a pocket listing, and why would people want to use it? Here’s everything you need to know about pocket listings in real estate. What Is a Pocket Listing? A pocket listing in real estate refers to an exclusive off market property listing. To understand what this means, let’s start off by explaining how it differs from a typical real estate listing. In a typical real estate listing, a homeowner wishing to sell his/her house hires a real estate agent to advertise and list the property publicly on the open market. The agent, therefore, uploads the property to a system known as the Multiple Listing Service (MLS), which allows all other real estate agents to see the listing and know that the property is for sale. As a result, the listing has the potential to be seen by a very large number of buyers. Conversely, in a pocket listing, real estate deals take place out of the public eye. A homeowner will inform their agent that they intend to sell their house but do not wish to list it publicly. Therefore, the agent won’t upload it to the MLS, but instead will only share the listing with a handpicked list of trusted agents who may connect the right buyers to the property. For this reason, a pocket listing is also referred to as a private listing or silent listing. Related: What Are Off Market Properties? How Can You Find One? Why Do Sellers Use Pocket Listings? There are many reasons why homeowners choose to list their home as a pocket listing. Below are three main reasons as to why they choose to do so. They want to test the housing market If the homeowners aren’t fully decided on selling their home, they can turn to pocket listings to get an idea of what potential buyers are willing to pay for the property. This is particularly useful when it comes to setting the asking price for the property. That way, if they ever choose to list their home on the MLS, they will know what price to ask for and thus be less likely forced to reduce the price. They want to ask for a specific price Many homeowners are not willing to negotiate their home price, and so they opt for an off market listing due to its selective nature. Their real estate agents may only advertise the listings to high net worth buyers in order to be sure to find someone who meets their asking price. They want to maintain their privacy Some people might not feel comfortable with the idea of posting pictures of their homes online or the idea of allowing complete strangers into their homes for viewings. Others simply don’t want the general public to know that they’re selling. Pocket listings are particularly a popular option among wealthy homeowners and public figures, most of whom prefer the privacy of the sale. Related: Can You Sell a House Without Listing It? Why Do Buyers Use Pocket Listings? Pocket listings may be appealing to certain buyers due to a number of reasons, including the following ones. There is less buyer competition for off market properties Many buyers look into pocket listings for sale to avoid getting caught in a bidding war. Since pocket listings are only advertised to a select few buyers, they receive less market exposure. A buyer will, therefore, be competing against only one or two other potential buyers, or even in some cases against no one at all! There is the possibility of buying a home at below market price Since buyer competition is reduced, there is a bigger chance for buyers to purchase a property under its open market value. In fact, when a homeowner who is eager to sell sees that their home isn’t receiving many offers, they will most likely reduce their asking price. The buying process may be more flexible Since homeowners who opt for pocket listings are willing to sell their home in a non-traditional way, they are more likely to be more flexible when it comes to buyer requirements such as move-out dates, furniture negotiations, and closing fees. Why You Might Want to Avoid Pocket Listings Despite their benefits, off market property listings can be potentially problematic for both sellers and buyers. As a Property Seller Sellers may encounter the following problems when opting for pocket listings: Off market properties may be sold for a lower price Since off market properties receive limited exposure and there are only a few buyers involved, a homeowner might be forced to sell their home at a low sale price due to the lack of competitive bids. The lower bids there are, the lower the sale price can be. It may take a long time to sell off market properties Pocket listings receive less attention. And because the competition is low, it may take sellers a long time to find buyers who are actually willing to pay their asking price. As a Property Buyer Similarly, buyers looking to purchase an off market investment property may encounter the following problems: There may be less room for price negotiation Sellers who list their home as a pocket listing are more likely to be less flexible when it comes to price negotiation with the buyers. While some sellers will be willing to settle for a lower price, many will refuse to sell their property until they find a buyer who meets their criteria. These sellers are typically just experimenting in the real estate market to see how it responds to their homes. Home options may be limited Buyers looking to purchase off market properties for sale will most probably have fewer options available to them during their search. There is also a big possibility that they get overlooked if they don’t meet the criteria that sellers and their agents are looking for. Is a Pocket Listing Illegal? The answer is no! There is nothing illegal about choosing not to advertise property listings on the MLS. However, according to the Realtor Code of Ethics, real estate agents are required to “promote and protect the interests of the client.” And so, legal risks can arise when pocket listings are not done in the client’s best interest. Since pocket listings typically result in the agent representing both parties in the transaction (i.e. the buyer and the seller), the outcome would be a double commission for the agent. While this in itself is not illegal or unethical, this should absolutely not be the reason a real estate agent suggests a pocket listing to their client. Therefore, it is crucial that the agent is transparent with their real estate client about the realities of pocket listings when suggesting this to them. How Can I Buy or Sell a Home as a Pocket Listing? Whether you’re a buyer wondering how to find pocket listings or a seller looking to sell an off market property, one thing’s for sure: you are going to have to seek the assistance of a professional. And there is no better way to do it than by contacting a real estate agent. A good real estate agent can guide you through the ins and outs of pocket listings and connect you to a seller or buyer that fits your criteria. Related: What Makes for a Good Real Estate Agent? However, don’t hire just any agent. Look for someone who is reliable and professional. In order to be 100% sure you find the right agent who can help you with a pocket listing, do some research first and look for the top agents in your area. Inquire about how they handle off market deals to know if they’re well connected and have an extensive professional network; and don’t forget to look up their previous and current real estate listings, as well as their sales history to make sure that they have the required experience and qualifications. As pocket listings are becoming more and more popular among both buyers and sellers, many real estate companies have started offering off market listing services on their websites. A perfect example of this is Mashvisor. Agents and homeowners can put their own properties for sale and list them as off market on the Mashvisor Property Marketplace. Interested buyers can then directly communicate with the sellers through the platform, and there’s a property calculator tool that can help them analyze the properties’ investment potential as well. To list your property off the market or to find pocket listings, visit Mashvisor’s Property Marketplace. Conclusion Whether you are thinking of selling a house or buying an investment property, pocket listings can make for great real estate deals, especially if you are looking to maintain your privacy. But know that along with pocket listings also come a set of potential drawbacks that you need to be aware of. So be sure to speak with your real estate agent in depth if you are interested in a pocket listing. Start Your Investment Property Search! START FREE TRIAL AgentListingsOff Market Properties 0 FacebookTwitterGoogle +PinterestLinkedin Sohel Farwaji Sohel is a Content Writer at Mashvisor. He enjoys writing about everything related to the world of real estate. 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