Most of us are familiar with the traditional process of selling a home. First, you hire a real estate agent and have them list your home for sale, usually through a local multiple listing service (RLS or MLS) and various consumer platforms. Then you wait for other agents or brokers to see the listing and bring their buyers to view it. But what if we told you there was another way? A way in which you can test your asking price and maintain your privacy. Welcome to the world of pocket listings, a lesser-known and sneaky way to sell your home.
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What is a Pocket Listing?What is a Pocket Listing?
This is a property that is technically for sale but won’t show up on any MLS sites. Try to search for it online, and you won’t find it. Instead, the seller’s agent in charge of the pocket listing will try to sell the property privately, usually through their contacts. By most estimates, pocket listings only make up about 10% of all national listings. It’s a very niche section of the real estate market that deals mostly in high-end real estate that needs a very particular buyer.
Why Would Someone Use Pocket Listings?Why Would Someone Use Pocket Listings?
So why the need for this hush-hush approach? Well, there are a few reasons for that.
- To Maintain Privacy – This tends to be the most common reason. Most sellers who go for the pocket listing approach tend to be high-end clients (usually celebrities) that don’t want to attract undue attention by listing their property publicly. This way, they can keep their private lives, well, private, and also weed out the looky-loos that are only interested in seeing how the rich and famous live their lives.
- To Test the Market – Even if you’re not a member of the 1%, pocket listings are also a sneaky way to test the water temperature in the market. By having your listing agent ask around privately, you can get an idea of what interested buyers are willing to pay for your home. This way, you can avoid having to reduce the price if you decide to list your home publicly.
- To Spend Less Time on the MLS – Listings that spend too much time on the market without selling tend to lose their shine. People start to wonder why it’s not selling and whether something might be wrong with it. A pocket listing allows you to get a head start if you choose to later sell through an MLS.
- To Give the Sellers an Extra Push – Some sellers don’t feel comfortable putting their home up for sale. However, if the right price came along, then maybe they’ll be willing to consider it. A pocket listing allows your listing agent to covertly find a motivated buyer that’s willing to pay the price you’re looking for. If they’re successful, then you’ll have a smooth transaction with no need for marketing or the hassle of hosting an open house.
The Downsides of Pocket ListingsThe Downsides of Pocket Listings
Although pocket listings might have a lot going for them, they also have a few downsides. Make sure you consider these before deciding on this route.
- Limited Exposure – The most obvious drawback is that your listing won’t generate a lot of interest. Of course, you only need to find one buyer. But that’s a lot harder to do when only a few dozen people will know about your listing compared to a few thousand if you went for a public listing.
- You Won’t Get Any Walk-In Traffic – Similarly, you won’t have any walk-in traffic from potential buyers that show up for open houses. Also, neighbors who are on the lookout for a nearby home for family or friends will not know about the listing.
- A (potentially) Lower Sales Price – Even the best market predictors can be caught unprepared when a home enters the market. If enough people show interest and make an offer, you can get a bidding war that sees your home sell for a lot more than you anticipated. Less likely to happen with a pocket listing.
Final ThoughtsFinal Thoughts
Pocket listings come with some definite advantages, but their disadvantages are also pretty obvious. For this approach to work, it helps if your home is a niche property in the several million dollars price range. Most buyers looking to buy a home like this won’t be spending their time combing through MLS sites. Instead, they’ll have their buyer’s agent make private enquires to see what’s available. Most regular sellers are better served going the traditional route with a public listing on an MLS site. This guarantees the maximum level of exposure, which is essential to getting top dollar for your home.
Speak with your real estate agent and ask them for their own opinion on doing a pocket listing. They should be able to tell you immediately if whether or not it’s a good idea. Who knows? It may well be that a pocket listing is a good idea for your situation. These types of listings aren’t just for the rich and famous. They can also have benefits for regular home sellers, so be sure you weigh the pros and cons carefully.