When it comes to the world of real estate, the term "pocket listing" is often thrown around. But what does it actually mean? Simply put, a pocket listing is a property that is for sale but not listed on the multiple listing service (MLS). The MLS is a database that real estate agents use to share information about properties that are on the market. A pocket listing is usually marketed discreetly and privately, with only a select group of potential buyers being made aware of its availability.
Why Use a Pocket Listing as a Home Seller?
There are several reasons why a seller or real estate agent might choose to use a pocket listing. One of the most common reasons is privacy. Some sellers might not want the general public to know that their property is for sale, especially if they are a celebrity or high-profile individual. A pocket listing allows them to keep their sale confidential and avoid any unwanted attention.
Another reason for using a pocket listing is exclusivity. By keeping a property off the MLS, the seller and their agent can control who sees it and who has access to it. This can create a sense of exclusivity and desirability, making the property more attractive to potential buyers.
Finally, a pocket listing can be a good option for sellers who are testing the market. By keeping their property off the MLS, they can gauge interest and receive offers without committing to a full listing. This can be especially helpful in a competitive market where properties are selling quickly and for high prices.
How Do Pocket Listings Work?
Pocket listings are typically marketed through the seller's real estate agent, who will share information about the property with a select group of potential buyers. This group might include other agents in their brokerage, buyers they have worked with in the past, or other individuals in their network.
The agent might also use targeted marketing tactics to reach potential buyers. For example, they might send out an email blast to their list of contacts or use social media to promote the property.
Because pocket listings are not on the MLS, they are not subject to the same rules and regulations. For example, they may not be required to have a For Sale sign on the property or hold open houses. This can make them more difficult to find for buyers who are not already part of the agent's network.
What are the Pros and Cons of Pocket Listings?
As with any real estate strategy, there are both pros and cons to using a pocket listing.
Pros:
- Privacy - Pocket listings allow sellers to keep their sale private and avoid any unwanted attention.
- Exclusivity - By keeping a property off the MLS, the seller and their agent can control who sees it and create a sense of exclusivity.
- Testing the market - Pocket listings can be a good option for sellers who are testing the market and want to gauge interest before committing to a full listing.
- Faster sale - In some cases, a pocket listing can lead to a faster sale, especially if the property is in high demand.
Cons:
- Limited exposure - Because pocket listings are not on the MLS, they are not as visible to potential buyers.
- Potentially lower sale price - Without the exposure of the MLS, a pocket listing may not generate as much interest or competition among buyers, which can result in a lower sale price.
- Ethical concerns - Some real estate professionals argue that pocket listings are unethical because they limit access to information about available properties.
- Discrimination concerns - Because pocket listings are marketed to a select group of buyers, there is a risk that certain groups may be excluded or discriminated against.
How to Find Pocket Listings
Off-market listings and pocket listings are more common than you may think. In fact, many for-sale by owner homes fall into the pocket listing category. Because this type of selling plan doesn’t require the seller to work with a real estate agent, the seller can market their home however they please. You can find pocket listings through successful agents, investors, wholesalers and online communities like neighborhood Facebook groups.
Conclusion
Pocket listings can be a useful tool for sellers and real estate agents, but they are not always easy to find. Networking with agents and investors will help you keep a pulse on upcoming pocket listings in your area.