Wow your real estate agent with your knowledge of pocket listings
Pocket listings aren’t listed on the multiple listing service.
Pocket listings help protect anonymity for homeowners.
Say goodbye to bidding wars with pocket listings.
Word of mouth is the marketing method for pocket listings.
The National Association for Realtors cracked down on pocket listings.
Buying a new home or selling your current home is an exciting time. And if you’re not familiar with the ins and outs of the real estate market, you might run into something called pocket listings. So, what are they and what do they mean for buyers and sellers?
Read on to learn more about pocket listings, the pros and cons for both sellers and buyers, and how these listings affect the real estate industry.
Pocket listings are properties that are for sale but not listed through traditional methods. These homes cannot be found for sale online through typical home listing websites, nor would the home have a for-sale sign on the lawn. These homes are sold by exclusive showings by word of mouth without ever being open to the general public.
In 2020, the National Association of Realtors implemented a policy to crack down on pocket listings due to the skew in data as well as the potential for violations of fair housing laws. The new policy, known as the Clear Cooperation policy, requires that realtors add any home to the MLS within one business day of marketing a property to the public.
There are a few exceptions, so there may still be pocket listings in your area. Nationally, new construction homes that have multiple properties under one listing agreement are exempt. Each state may have its own exemptions, so review your state’s policy concerning Clear Cooperation.
The biggest way pocket listings impact the real estate industry is through data. When pricing homes, real estate agents look at the current market. This allows the agent to suggest a competitive price to the homeowners.
Since pocket listings are private, the information is not available in the MLS, which can skew the numbers and impact property values when there are too many pocket listings for a given location.
Real estate agents use an official database called the multiple listing service (MLS) when selling homes. This is the official database that agents use to learn information about available homes. Pocket listings are privately listed homes and are unavailable in the MLS.
In real estate, pocket listings, which are sometimes referred to as off-market listings, are homes that are not viewable by the general public. These types of listings are not real estate scams. Pocket listings rely instead on word of mouth or can be found through private listing services.
When you can seemingly get much more attention by selling your home through traditional routes, why would anyone choose a pocket listing? Here’s a look at the biggest benefits.
If a seller wants to maintain privacy for their home sale, pocket listings are the way to go. This is especially true for celebrities and public figures to help keep their privacy and prevent sharing too much personal information with strangers online. A pocket listing narrows the buying pool to a much smaller audience and reduces public interest in the home.
More exclusive listings ensure sellers only have buyers who are seriously interested in purchasing the home. Private listings help weed out onlookers who are only looking to see an expensive home with no intention of putting in an offer. If homeowners are looking to sell their home quickly, pocket listings can be a smart move.
Pocket listings have a similar benefit when the buyer pool is small. This means there is less competition for the home and makes it unlikely a bidding war will take place. No homebuyer likes to have their dream home ripped out from under them.
For homeowners looking to sell their home but don’t know how to price it, a pocket listing is a great trial run. This helps them gauge interest in their home and helps determine a strategic selling plan. If the seller has an ideal price in mind, a pocket listing shows them whether this price will generate the interest they’re looking for. This allows the seller to set a more realistic price when it hits the MLS.
But why does a realistic price matter? One factor homebuyers look at when searching for a home is how long it’s been on the market. A home that is on the MLS for a long time could raise some red flags. Testing the price beforehand eliminates that worry.
Now that your interest is piqued by pocket listings, let’s take a look at the downsides.
Due to the exclusive nature of pocket listings, the buying pool is smaller. While this does have some benefits, there are also some cons. Properties will receive fewer offers and there will be less competition. Less competition means no bidding wars, which can be a good thing as it sometimes helps to drive the price up.
While buyers won’t have to worry about bidding wars in a pocket listing, there’s also not likely room for price negotiation. After all, this might be a primary reason the seller chooses a pocket listing: to get a specific price for the home. The luxury of negotiating might not be available.
Pocket listings will also take longer to sell due to a decrease in visibility. The real estate agent these sellers hire is essentially working alone. They are the only individual responsible because the listing isn’t in the MLS and other real estate agents who work for buyers aren’t able to see it.
As a buyer, there’s often very little information about the pocket listing property online, which can create a roadblock when searching for a home. The listing isn’t online, so the only way to review the property is in-person. Many homebuyers like to review the details and images of the home after seeing it to assist them in determining if this is the home for them.
As a homebuyer, if you’re struggling to find and secure a new home, a pocket listing might be the way to go to avoid the hassle of bidding wars. Word of mouth is a great method of learning about pocket listings in your area. The first place to start is by hiring a real estate agent.
A real estate agent who is well-connected to not only other real estate agents but also contractors and building developers may have information on private listings. While these listings are private, there are plenty of people who are in the know about the properties. Your agent can put the word out about what type of home you’re searching for and see if there are pocket listings in the area.
